ktlight
4th May 2011, 08:28
Deutsche Bank has been sued by the US Justice Department for more than USD 1 billion for defrauding the government.
According to the complaint, Deutsche Bank's MortgageIT subsidiary lied in order to get Federal Housing Administration (FHA) insurance for its loans, state-run BBC reported.
FHA rules say lenders must make sure the borrower will be able to repay the loan, but the Justice Department claims Deutsche did not do so.
The claim is "unreasonable and unfair” and "we intend to defend against the action vigorously," a Deutsche spokesperson said on Tuesday.
The lawsuit is one of the first targeting mortgage lenders under the federal False Claims Act.
The government says that between 1999 and 2009, MortgageIT endorsed more than 39,000 mortgages for FHA insurance.
Deutsche Bank bought MortgageIT for USD 430m in 2007, and the government said it had paid out more than USD 386m in FHA insurance claims and related costs.
The global financial crisis was sparked by mortgages being given to people who could not afford them, with the debt then being repackaged and sold on to investors.
The US government has been trying to hold the mortgage industry responsible for the crisis as well as the housing slump and large numbers of foreclosures.
source
http://www.presstv.ir/detail/178152.html
According to the complaint, Deutsche Bank's MortgageIT subsidiary lied in order to get Federal Housing Administration (FHA) insurance for its loans, state-run BBC reported.
FHA rules say lenders must make sure the borrower will be able to repay the loan, but the Justice Department claims Deutsche did not do so.
The claim is "unreasonable and unfair” and "we intend to defend against the action vigorously," a Deutsche spokesperson said on Tuesday.
The lawsuit is one of the first targeting mortgage lenders under the federal False Claims Act.
The government says that between 1999 and 2009, MortgageIT endorsed more than 39,000 mortgages for FHA insurance.
Deutsche Bank bought MortgageIT for USD 430m in 2007, and the government said it had paid out more than USD 386m in FHA insurance claims and related costs.
The global financial crisis was sparked by mortgages being given to people who could not afford them, with the debt then being repackaged and sold on to investors.
The US government has been trying to hold the mortgage industry responsible for the crisis as well as the housing slump and large numbers of foreclosures.
source
http://www.presstv.ir/detail/178152.html