Former Quicken Loans employees who worked at the lender between 2004 and 2007 have filed a lawsuit in Minnesota claiming not only that executives didn’t pay fairly and they were forced to work extended hours, but their employers forced them to participate in predatory lending practices.
The lawsuit claims that a sales director told one employee to “simply pick an income level that would be approved by underwriting rather than use the customers’ actual income.”
The employees allege that they were forced to use high pressure sales tactics targeting clients they knew to be vulnerable and pressure them to take deals they didn’t want or need.
Predatory lending practices alleged in the lawsuit also include misleading borrowers about loans to push through bad deals.
In a sworn statement, one employee alleges that managers told sales people to boost their commissions by charging higher interest rates despite qualifying for a lower rate. “The worse the client’s situation was and the lower their credit, the easier it was to charge excessively high rates.”
Also on the record, one former employee alleges that between 2004 and 2005, managers told her to push adjustable rate mortgages even when they weren’t the best option for the buyer because Quicken stood to profit more on these types of loans.
Another former employee stated on the record that Quicken employed “bruising” strategies wherein sales would find a flaw in a borrowers’ credit and lead them to believe it would disqualify them with any other lenders, making them fearful and feel their only option was to work with Quicken despite the flaw having no bearing on other lenders’ qualification criteria.
Known for not settling, Dan Gilbert, founder of Quicken Loans (and majority owner of NBA’s Cleveland Cavaliers) claims that their corporate policy is to “do the right thing,” and in this case he says the right thing is to fight in court and calls the lawsuit “extortion” and a case of former employees seeking “ransom.” Gilbert claims he will fight so there is not precedent set for employees to victimize other lenders in this manner.
In February 2010, a West Virginia judge ruled that Quicken defrauded a borrower by misleading her about a loan using an appraisal that inflated the value of the home nearly 300%. The judge called the conduct “unconscionable” and that it “ignored obvious flaws,” this week ruling for $2.7 million in punitive damages and over $600,000 in legal fees which Quicken plans to appeal, Gilbert calling Quicken the “victim” in this suit.
Despite a lost lawsuit and sworn testimony from former employees alleging predatory lending and fraud, Quicken remains JD Power and Associates’ top home loan company for customer satisfaction and Gilbert asserts they have always followed industry standards.
