The Justice Department filed suit Thursday against Guild Mortgage, arguing the firm violated the False Claims Act by improperly originating and underwriting Federal Housing Administration loans.

Justice alleges that Guild submitted hundreds of improperly underwritten FHA-insured loans from 2006 to 2011.

"Guild grew its FHA lending business by ignoring FHA rules and falsely certifying compliance with underwriting requirements in order to reap the profits from FHA-insured mortgages," the Justice Department said in a press release.

But the firm disputes the government's claims.

"The government's action is unwarranted and without merit," Mary Ann McGarry, the San Diego company's president and CEO, said in a statement. "The implication that any default on an FHA loan by a borrower represents wrongdoing by the lender is not justified. For more than five decades Guild has responsibly underwritten fixed rate and fully documented loans in accordance with FHA requirements."

Justice claims that Guild knowingly filed claims to be reimbursed for losses on hundreds of improperly underwritten FHA-insured loans.

"To protect the housing market and the FHA fund, we will continue to hold responsible lenders that knowingly violate the rules," said Benjamin Mizer, the principal deputy assistant Attorney General.

In the statement, McGarry said it is "unfortunate that lenders are placed in an untenable position where a minor error could result in substantial financial penalties." She also noted the enforcement environment threatens to limit homeownership opportunities and hurts the housing market.

Guild is one of the largest independent mortgage banking companies in the U.S. and originated $13.8 billion in loans in 2015. It has 234 branch and satellite offices in 25 states.

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