Feds sue mortgage broker, alleging lending fraud

November 1, 2011 - 12:25 PM

NEW YORK (AP) — The federal government has sued one of the nation's largest privately held mortgage brokers in New York. It says the company committed lending fraud as the government was paying $834 million in insurance claims.

The lawsuit was filed Tuesday in federal court in Manhattan against Allied Home Mortgage Capital Corp.

It seeks unspecified damages and civil penalties.

The lawsuit says a decade of "concealed misconduct" by Allied resulted in tens of thousands of defaulted loans and forced thousands of American homeowners to face eviction.

The suit says the fraud cost the government hundreds of millions of dollars in losses.

A message left with the company seeking comment was not immediately returned.