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U.S. sues mortgage broker over alleged lending fraud

NEW YORK — The federal government sued one of the nation’s largest privately held mortgage brokers Tuesday, saying its decade-long fraudulent lending practices cost the government hundreds of millions of dollars and forced thousands of American homeowners to face eviction.

The lawsuit in U.S. District Court in Manhattan sought unspecified damages and civil penalties and named as defendants Houston-based Allied Home Mortgage Capital Corp., founder Jim Hodge and Jeanne Stell, the company’s executive vice president and director of compliance.

Joe James, a company spokesman, said he was aware of the lawsuit but had not seen it. He declined immediate comment.

In the lawsuit, the government said Allied until recently had the authority to originate mortgage loans insured by the U.S. Department of Housing and Urban Development.

• From wire dispatches and staff reports