Quicken Loans and its billionaire founder, Dan Gilbert, have been on a hot streak.
As competitors have struggled in the wake of the financial crisis, Quicken has become one of the nation’s largest mortgage lenders, using two of Gilbert’s other ventures – the NBA’s Cleveland Cavaliers and their home base, Quicken Loans Arena – as marketing tie-ins.
Quicken says it has survived and thrived because it’s one of the good guys in the mortgage business – a lender that stayed away from subprime loans and dicey practices. Surveys rank Quicken as the No. 1 home lender for customer satisfaction and as one of America’s best places to work. Quicken’s success, Gilbert says, is “driven by our special culture . . . Our people bring their ‘A’ game with them to work every day.”
Not everyone is cheering Quicken’s game plan.
Lawsuits from borrowers and ex-employees claim Quicken’s day-to-day tactics are at odds with its squeaky clean image. They accuse the company of using high-pressure salesmanship to target elderly and vulnerable homeowners, as well as misleading borrowers about their loans, and falsifying property appraisals and other information to push through bad deals.
Last February, a state court judge in West Virginia found that Detroit-based Quicken had committed fraud against a homeowner by misleading her about the details of her loan, charging excessive fees, and using an appraisal that exaggerated the value of her home by nearly 300 percent. The judge called the lender’s conduct “unconscionable.”
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Trial in Detroit Begins Tuesday
A group of ex-employees, meanwhile, have gone to federal court to accuse Quicken of abusing workers and customers alike. In court papers, former salespeople claim Quicken executives managed by bullying and intimidation, pressuring them to falsify borrowers’ incomes on loan applications and to push overpriced deals on desperate or unwary homeowners.
Managers urged salespeople to boost their commissions by “locking the customer into a higher interest rate, even if they qualified for a lower rate, and rolling hidden fees into the loan,” Michael Pikora, a former loan salesman, said in a sworn statement in a lawsuit involving hundreds of ex-employees who contend Quicken forced them to work unpaid overtime. The case, one of several overtime pay lawsuits against the lender, is set to go to trial in federal court in Detroit next Tuesday. “The worse the client’s situation was, and the lower their credit, the easier it was to charge excessively high rates,” Pikora said.
The allegations against Quicken show that efforts to assign blame for the practices that helped crash the mortgage market are far from complete. The claims against Quicken aren’t as widespread as they were against some of the nation’s most tarnished home lenders, such as Ameriquest Mortgage and Countrywide Financial. But they do shine a light on the practices and perceptions of a brand-name lender that escaped the mortgage meltdown without major problems or negative publicity.
“There were others that did more, but Quicken did their share, and they hurt a lot of people,” Jim Bordas, an attorney who sued Quicken in the West Virginia fraud case, contends.
Quicken denies it mistreats workers or customers.
In the West Virginia case, the company said there was no fraud and that its mortgage lending practices followed industry standards. As for the lawsuits from former employees seeking overtime pay, Quicken describes them as the product of “parasitic” plaintiffs’ attorneys who specialize in filing “meritless claims in an effort to coerce settlements from job-producing companies.”
A spokeswoman for the company told the Center for Public Integrity that every mortgage lender in America “has been beset” by claims of misconduct, and most “are quite frivolous in nature. In fact, it’s our belief that Quicken Loans has received a disproportionately low number of claims in relation to our volume, meaning that we wrote better loans than our competitors.”
For his part, Gilbert, the chairman of Quicken Loans, says that his loan consultants are trained professionals. They work closely with borrowers “and kind of go deep into their background and analytically recommend things to them. Almost like an artist. They have to paint the picture of their financial condition” to come up with the best loan for a customer’s circumstances, he testified in 2005 for the overtime pay case.
To read the rest of the story: http://www.publicintegrity.org/articles/entry/2889/
Michael Hudson is a staff writer at the Center for Public Integrity and author of THE MONSTER: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America — And Spawned a Global Crisis .