Quicken to Pay $32.5 Million to End Federal Investigation
After striking a deal with the federal government last month to end a long investigation into Quicken Loan's lending practices, chairman Dan Gilbert suffered a stroke.
Gilbert, who is also the owner of the Cleveland Cavaliers basketball team, had fought the government's allegations for seven years. He said the company would never settle, but agreed to pay $32.5 million with no admission of wrongdoing.
Now he is out of the hospital, and the government has dismissed the case. Gilbert is on a long road to recovery, but Quicken came out stronger than ever.
Stronger Than Ever
Quicken has become the largest Federal Housing Administration lender in the United States. The Justice Department opened its investigation into nearly 246,000 FHA loans that Quicken had originated from 2007 through 2011. By April, the number had dropped to 109.
The company, meanwhile, made $108 billion in loans during that time. Vice Chairman Bill Emerson said that included "loans in error" totaling $25.5 million, which is 0.02 percent of the company's loans since 2007.
"We didn't settle; we did exactly what we said we would do," Emerson said. "We looked at some of the loans, and there were a few we made a mistake on. We made them whole. That's all we did."
Erik Gordon, a professor at the University of Michigan's Ross Business School, told the Detroit News the case against Quicken apparently was not strong. He cited the "small dollar amount" and no admission of liability.
'Small Dollar Amount'
According to reports, the settlement payment will go to pay the government's costs in the case. That includes $25.5 million, plus $7 million in interest.
Gilbert, in the meantime, is in a rehabilitation facility. The 57-year-old billionaire was taken to the hospital after experiencing stroke-like symptoms on May 26.
"Dan's on the path to recovery,” said Koby Altman, the Cavalier's team manager. "It's still going to be a long recovery. His mind's still intact and he still sounded like Dan, which is super aggressive and go after this thing."
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