A federal judge has given the green light to a fraud lawsuit brought by the U.S. government against Allied Home Mortgage Capital Corp. Allied is alleged to have fostered a “culture of corruption” that led to the fraudulent misrepresentation of the creditworthiness of thousands of mortgage applicants. One of the government’s more colorful allegations is that some members of Allied’s quality control staff did not even know what a mortgage was. Allied’s motion to dismiss was denied in a decision made public Tuesday, clearing the way for trial in the Southern District of Texas.

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