A judge rejected federal prosecutors' request for a temporary restraining order to prevent Ideal Mortgage Bankers Ltd., which does business as Lend America, from writing Federal Housing Administration loans.
U.S. District Judge Joseph F. Bianco in Central Islip, N.Y., issued his ruling late Wednesday. The U.S. Attorney's Office for the Eastern District of New York sued Lend America Tuesday, alleging the company falsely certified that borrowers who received more than $14 million in loans met FHA requirements.
Lend America said that it was "pleased with the court's decision," and that it would continue originating FHA loans.
Brian Sullivan, a spokesman for the Department of Housing and Urban Development, the FHA's parent agency, said that "the burden is high to get a judge to shut down a business instantly."
The FHA has filed a notice of violation against Lend America and the Melville, N.Y., company has 30 days to respond, he said.
Sullivan said HUD will continue to pursue action against the company.