Feds Suing Deutsche Bank for Mortgage Fraud
Just when it seemed that big banks would be let off the hook for defrauding the government and coercing innocent Americans into shoddy loans, the feds have swept in with a civil suit against Deusche Bank, alleging predatory practices that cost the country millions. The Washington Post:
The suit, which seeks $1 billion in damages, says that Deutsche Bank lied about the quality of its lending practices in order to get access to the government’s massive mortgage insurance program.
Between 1999 and 2009, the bank’s subsidiary, MortgageIT, got backing from the Federal Housing Administration for more than 39,000 loans worth more than $5 billion. In exchange, the firm was required to ensure that its lending met federal standards.
But, prosecutors say, the bankers “never held up their end of the bargain.”
“Borrower after borrower defaulted — often within just months of closing — because those loans were doomed to fail,” Preet Bharara, U.S. attorney for the Southern District of New York, said at a news conference.
So, essentially, they're going after Deutsche Bank for doing what most big banks are accused of doing in the leadup to the 2008 financial meltdown. The Post points out that last month in a report released by a Senate panel, Deutsche was called out as well as Goldman Sachs, so it will be interesting to see if that giant's next in the lawsuit queue. But for now, the latest news is a small victory. And if you weren't infuriated enough, here's another little gem: complaints sent to MortgageIT from an outside auditor were “literally stuffed in a closet and left unread and unopened.” Talk about corporate solipsism and greed. Read the full piece at the Washington Post.