Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Friday, July 29, 2011

U.S. Sues Mortgage Lending Business President & Founder in Connection with HUD Insured Loans

Chicago-Area Business Originated More than 180 FHA-Insured Loans That Later Defaulted

WASHINGTON – The United States has filed a civil lawsuit against Robert S. Luce, founder and president of MDR Mortgage Corp., a mortgage lending business located in Palatine, Ill., the Justice Department announced today. MDR participated in mortgage insurance programs administered by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA). The United States’ complaint seeks recovery under the False Claims Act and civil penalties under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA).

According to the complaint filed today in the U.S. District Court for the Northern District of Illinois, Luce was indicted on April 7, 2005, for mail fraud, wire fraud, obstruction of justice and making false statements. Between April 2005 and October 2008, Luce represented to HUD, and caused MDR employees to represent to HUD, that he was not under criminal investigation or indictment. These statements were false at the time they were made, and Luce knew they were false at the time he or other MDR employees made them. Because Luce was under indictment, MDR was not entitled to originate mortgage loans under FHA requirements. Yet, MDR originated more than 90 FHA-insured loans that later defaulted.

HUD was required to pay more than $1.6 million in insurance claims to holders of the defaulted mortgage notes, as well as costs and expenses on these loans. MDR is no longer participating in the HUD insurance programs.

“The FHA is intended to help families achieve the dream of home ownership,â€