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. 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.
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