Claims of High-Pressure Sales, Fraud At Odds With Quicken Loans’ Straight-Shooting Image

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.”

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.

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Quicken Loans, which makes loans from centralized internet lending centers in Michigan, Ohio, and Arizona, is now the nation’s largest online mortgage lender, the third largest FHA lender, and the fifth largest retail mortgage lender. It has nearly 4,000 employees, and closed more than $25 billion in home loans in 2009.

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Gilbert told The Cleveland Plain Dealer. “We just never got into that business.”

Borrower lawsuits and statements from ex-employees, however, indicate that Quicken sold some classes of risky loans during the mortgage boom.

These included “interest-only” loans and “negative amortization” loans, which have been criticized by consumer advocates because they provided the illusion of low initial payments but were dangerous in the long run because they didn’t pay down borrowers’ mortgage debt. In the case of negative amortization loans, borrowers’ debt grows even as they make on-time payments.