Government accuses Deutsche Bank of mortgage fraud

U.S. prosecutors are suing Deutsche Bank and accusing it of fraudulently approving mortgages over a number of years in ways that have ended up costing the government hundreds of millions of dollars.

The lawsuit filed Tuesday morning in Manhattan federal court says that Deutsche Bank and its subsidiary, MortgageIT, lied to the government and “recklessly” approved mortgages for federal mortgage insurance without fully vetting the quality of the mortgages.

From 1999 to 2009, MortgageIT was part of a government program that allowed it to approve home loans for Federal Housing Administration mortgage insurance, and it ended up doing this with 39,000 mortgages worth $5 billion, according to the complaint. After Deutsche Bank acquired MortgageIT in January 2007, it marketed and sold these mortgages to investors.

Full Story: Government accuses Deutsche Bank of mortgage fraud