Deutsche Bank Faces U.S. Fraud Lawsuit Over Mortgage Lending (US seeks $1 Billion)

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Source: Business Week

Deutsche Bank Faces U.S. Fraud Lawsuit Over Mortgage Lending
May 03, 2011, 10:57 AM EDT
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May 3 (Bloomberg) -- Deutsche Bank AG, Germany’s biggest bank, was sued for more than $1 billion by the U.S. government for allegedly selecting mortgages “recklessly” for inclusion in a government insurance program.

The Frankfurt-based bank and its MortgageIT unit violated the U.S. False Claims Act by presenting fraudulent data to obtain mortgage insurance from the Federal Housing Administration of the U.S. Housing and Urban Development Department, according to the complaint filed today in Manhattan federal court.

“While Deutsche Bank and MortgageIT profited from the resale of these government-insured mortgages, thousands of American homeowners have faced default and eviction, and the government has paid hundreds of millions of dollars in insurance claims, with hundreds of millions of dollars more expected to be paid in the future,” according to the complaint.

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As of February, HUD had paid more than $386 million in FHA insurance claims and related costs arising from Deutsche Bank- approved mortgages, according to the complaint. Under the False Claims Act, the U.S. can seek triple damages and penalties, meaning it could demand more than $1 billion.

Read more: http://www.businessweek.com/news/2011-05-03/deutsche-bank-faces-u-s-fraud-lawsuit-over-mortgage-lending.html