Deutsche Bank dragged to court in US for mortgage fraud
03 May 2011
The US authorities have filed a lawsuit against Deutsche Bank AG for defrauding the government with false claims of more than $1 billion.
The lawsuit filed on Tuesday, under the Federal Claims Act, accuses the German bank of repeatedly lying to obtain federal insurance guarantees on mortgage debt.
The suit filed in the US district court in Manhattan, charges MortgageIT of endorsing more than 39,000 mortgages of a total $5 billion for Federal Housing Administration insurance, claiming them to be federal government backed, between 1999 and 2009.
The lawsuit, filed against Deutsche Bank and its MortgageIT Inc unit marks the government's renewed attempt at holding the mortgage industry responsible for the regulatory breaches that contributed to the continuing US housing slump and thousands of foreclosures.
Deutsche Bank, however, said the government's claims are unreasonable. "We believe the claims against MortgageIT and Deutsche Bank are unreasonable and unfair, and we intend to defend against the action vigorously."
The government, however, holds that the bank and its arm recklessly chose mortgages that were against the rules only to gain profit from the eventual resale of the loans.
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