Sunday, June 3, 2012

Deutsche, Affiliate Admit To Peddling Crappy FHA Mtgs; Head NYC Fed On Banksters' Practices: "Seemed To Treat Red Flags As If They Were Green Lights!"

From the Office of the U.S. Attorney (Manhattan):

  • Preet Bharara, the United States Attorney for the Southern District of New York, [and others] announced [] that the United States has settled a civil fraud lawsuit against DEUTSCHE BANK AG, DB STRUCTURED PRODUCTS, INC., DEUTSCHE BANK SECURITIES, INC. (collectively “DEUTSCHE BANK” or the “DEUTSCHE BANK defendants”) and MORTGAGEIT, INC. (“MORTGAGEIT”).

  • The Government’s lawsuit, filed May 3, 2011, sought damages and civil penalties under the False Claims Act for repeated false certifications to HUD in connection with the residential mortgage origination practices of MORTGAGEIT, a wholly-owned subsidiary of DEUTSCHE BANK AG since 2007.

  • The suit alleges approximately a decade of misconduct in connection with MORTGAGEIT’s participation in the Federal Housing Administration’s (“FHA’s”) Direct Endorsement Lender Program (“DEL program”), which delegates authority to participating private lenders to endorse mortgages for FHA insurance.

  • Among other things, the suit accused the defendants of having submitted false certifications to HUD, including false certifications that MORTGAGEIT was originating mortgages in compliance with HUD rules when in fact it was not.

  • In the settlement [...], MORTGAGEIT and DEUTSCHE BANK admitted, acknowledged, and accepted responsibility for certain conduct alleged in the Complaint, including that, contrary to the representations in MORTGAGEIT’s annual certifications, MORTGAGEIT did not conform to all applicable HUD-FHA regulations.
For the lawsuit, see U.S. v. Deutsche Bank, et ano.
In a statement in connection with this litigation, the U.S. Attorney made these observations on the bankster's lending practices that precipitated this lawsuit:
  • The complaint describes, in detail, lenders taking abusive advantage of a vital Government mortgage insurance program, issuing billions in loans to countless aspiring homeowners. But while the homes the defendants issued loans for may have been built on solid ground, the defendants’ lending practices were built on quicksand.

  • Borrower after borrower defaulted – often within just months of closing – because those loans were doomed to fail. Why? Because, as alleged, the defendants simply ignored every type of red flag and breached every duty of due diligence before endorsing mortgages for federal insurance.

  • In fact, they seemed to treat red flags as if they were green lights. Ultimately, prudence was trumped by profit, and good faith took a back seat to good fees.

No comments: