MDR Mortgage and its founder and president Robert Luce are facing a lawsuit filed by the Department of Justice for the alleged misrepresentation of Department of Housing and Urban Development-insured loans.
Luce, who was indicted in April 2005 for mail fraud, wire fraud, obstruction of justice and making false statements, allegedly told HUD, along with MDR employees, that he was not under criminal investigation and was allowed to originate mortgage loans. Between April 2005 and October 2008, Luce and MDR employees originated more than 90 Federal Housing Administration insured loans that later defaulted, causing the government to repay more than $1.6 million in insurance claims to holders of the defaulted mortgage notes.
Since the defendant was under indictment at this time, MDR was not entitled to originate mortgage loans under FHA requirements.
According to the Department of Justice, MDR does not currently participate in HUD insurance programs.
“The FHA is intended to help families achieve the dream of home ownership,” said Tony West, assistant attorney general of the Justice Department’s civil division. “Mortgage lenders who lie in order to reap the benefits of these insurance programs, as is alleged here, undermine the integrity of these programs and misuse taxpayer funds that are meant to support single-family housing.”
The lawsuit, filed in District Court for the Northern District of Illinois, seeks recovery under the False Claims Act and civil penalties under the Financial Institutions Reform, Recovery and Enforcement Act.
