Deutsche Bank's A Liar, Say Feds In "False Claims" Suit Alleging Outfit Ran Racket That Scammed FHA Mortgage Insurance Program

In New York City, The Wall Street Journal reports:

• The Justice Department accused Deutsche Bank AG of "recklessly" lying about the quality of loans made by a mortgage unit of the German bank and guaranteed by the U.S. government.
• In a civil lawsuit filed Tuesday in federal court in Manhattan, U.S. Attorney Preet Bharara sought to recover alleged damages and losses on mortgages insured by the Department of Housing and Urban Development, which could total more than $1 billion.
• The 48-page lawsuit detailed what Mr. Bharara said was a decade-long disregard of basic underwriting standards and quality control at mortgage lender MortgageIT Inc., which was acquired by Deutsche Bank in 2007.

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• Tuesday's lawsuit against Deutsche Bank is the highest-profile case brought by a unit Mr. Bharara set up last year to pursue civil actions in complex financial-fraud cases. It wouldn't be a "fantastical stretch to think we are looking at other financial institutions as well," Mr. Bharara said at a news conference, declining to be more specific.

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• "While Deutsche Bank and MortgageIT profited from the resale of these government-insured mortgages, thousands of American homeowners have faced default and eviction, and the government has paid hundreds of millions of dollars in insurance claims," the suit against Deutsche Bank alleged.

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• The lawsuit was filed under the False Claims Act, which allows the government to seek three times the losses suffered by HUD, as well as punitive and other damages.

For more, see U.S. Says Deutsche Bank Lied (Suit Accuses Lender of Misrepresenting Quality of Loans Made by Mortgage Unit) (requires paid subscription; if no subscription, TRY HERE, then click appropriate link for the story).

For the lawsuit, see USA v. Deutsche Bank.

For the U.S Attorney (Manhattan - New York City) press release, see Manhattan U.S. Attorney Sues Deutsche Bank And Subsidiary MortgageIt For Years Of Reckless Lending Practices.