Deutsche Bank says hit by another US lawsuit

May 05, 2011 | 14:45

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German giant Deutsche Bank said Wednesday it had been hit by another lawsuit in the United States over property loans, a day after the US Justice Department sued it for $1 billion for mortgage fraud.

source: AFP

The German bank said in a statement "the Los Angeles prosecutor has filed a lawsuit against the wrong person."

Deutsche Bank said that intermediaries such as loan servicers were contractually responsible for seized property.

The lawsuit filed Tuesday by the US Justice Department in New York federal district court, said that MortgageIT, acquired by Deutsche Bank in January 2007, insured 39,000 home loans worth more than $5 billion with the Federal Housing Administration (FHA) in the decade to 2009.

The mortgages were "recklessly" approved by the company in "blatant disregard" of whether the borrowers would be able to make payments on them.

Both the bank and MortgageIT "made substantial profits through (the) resale of these FHA-insured mortgages," many of which later ended up in default, the complaint said.

Deutsche Bank and its subsidiary MortgageIT "repeatedly lied to be included in a government program to select mortgages for insurance by the government," the Justice Department complaint said.

Germany's biggest bank rejected the charges and pledged to mount a vigorous defence.

"The suit is unfounded and we intend to defend ourselves vigorously against this action," a Deutsche Bank spokesman told AFP, declining to comment further.

AFP

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