Deutsche Bank Faces U.S. Fraud Lawsuit Over Mortgage Lending

May 03, 2011, 10:57 AM EDT
More From Businessweek

U.S. Seeks $1 Billion From Deutsche Bank in Mortgage Fraud Suit
U.S. Sues Deutsche Bank and MortgageIT Unit Over Loan Program
Rajaratnam, Barclays, JPMorgan, Citigroup in Court News
Justice Department Said to Extend Review of T-Mobile Bid by AT&T
Lehman Seeks $500 Million From Barclays in Bonus Dispute

Story Tools

e-mail this story
print this story
1digg
add to Business Exchange

By David Voreacos

(Updates with possible damages in fifth paragraph.)

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.... see link above for more.