Susan Tompor | Detroit Free Press

After years of legal haggling, Quicken Loans has agreed to pay $32.5 million to resolve a case brought by the federal government accusing the big mortgage lender of fraud relating to FHA-mortgages made several years ago.

In the agreement, Quicken, which made no admission of wrongdoing, will continue to participate in the Federal Housing Administration loan program, a key part of its business.

Jessica J. Trevino, Detroit Free

Bill Emerson, vice chairman of Quicken Loans, said Friday that Quicken had done nothing wrong but instead agreed to resolve cases where mistakes were made.

"Resolution is the right term, not settlement," Emerson said.

Emerson said in a phone interview with the Free Press that the federal government had sought a settlement that would have been significantly higher, perhaps closer to the $200 million range.

"We had done nothing wrong," Emerson said. "Their claims were not supported."

Emerson said the company is agreeing to pay $25.5 million to make the government whole for losses when mistakes involving "human error" were made. The agreement also involves paying $7 million in interest, according to Quicken Loans.

Emerson stressed that number represents a 0.02% error rate on some $108 billion in FHA-related lending from 2007 to the present.

"We did exactly what we said we would do from the beginning," Emerson said. "At the end of the day, I think this was a fishing expedition from a previous DOJ."

As time went on, Emerson said the government's case "got smaller and smaller and smaller."

He declined to detail what mistakes were made or how many specific mortgages were involved.

Quicken Loans has said the company is the nation's largest FHA-lender in the country and it has had the FHA's lowest delinquency and default rates in the nation for years based on the FHA's own standards.

The Quickens Loans case had gone before a mediator, former federal Judge Gerald Rosen, in April after U.S. District Judge Mark Goldsmith in Detroit ordered the Justice Department and Quicken Loans to attempt a settlement. Rosen is best known as the mediator in the City of Detroit's 2013-14 municipal bankruptcy.

"The parties worked diligently, and in good faith, to mediate for a solution to resolve their differences and to put the dispute behind them," Rosen said in a statement Friday.

"This resolution is in the interests not only of the parties, but of the home-buying public," Rosen said.

"All parties fully understand the important role the FHA program plays in helping middle-class Americans access home financing, and this resolution allows the parties to move ahead together with that mission and to ensure their future relationship."

A trial had been expected to begin in the summer.

Back in April 2015, the United States filed a complaint in U.S. District Court for the District of Columbia against Quicken Loans for improperly originating and underwriting mortgages insured by the Federal Housing Administration.

The government's complaint had alleged that from September 2007 through December 2011, Quicken knowingly submitted or caused the submission of claims for hundreds of improperly underwritten FHA-insured loans.

The lawsuit accused the company of defrauding the United States by deliberately making FHA-backed mortgage loans without proper justification, leaving the government to pay when the borrowers defaulted.

Dan Gilbert, chairman and founder of Quicken Loans and his attorneys, had long contended that the Justice Department, stung by bad publicity from the collapse of the subprime mortgage market, had been suing a string of big mortgage lenders in hopes of extracting huge settlements.

Many big mortgage lenders had settled and paid big penalties rather than contest the government's accusations.

In late 2016, United Shore Financial Services agreed to a $48 million settlement with the U.S. Justice Department.

In 2016, Regions Bank agreed to pay a $52.4 million settlement to the government involving alleged abuses from originating mortgage loans insured by the Federal Housing Administration.

In 2014, Bank of America agreed to pay $16.65 billion to resolve federal and state claims against Bank of America and its former and current subsidiaries, including Countrywide Financial Corporation and Merrill Lynch. As part of that complex case, the bank then conceded that it originated risky mortgage loans and made misrepresentations about the quality of those loans to Fannie Mae, Freddie Mac and the Federal Housing Administration.

For years, Quicken had kept up the fight, saying it had done nothing wrong.

Amy Thompson, HUD’s Assistant Secretary for Public Affairs, called Friday's agreement important to the future of HUD’s relationship with Quicken.

“FHA relies on its partnerships with lenders, such as Quicken Loans, to advance home buying opportunities for Americans, and we look forward to continuing our relationship with Quicken Loans,” Thompson said.