The United States filed a lawsuit against Deutsche Bank AG and its wholly owned subsidiary, MortgageIT Inc., seeking damages and civil penalties for repeated false certifications made to the U.S. Department of Housing and Urban Development (HUD) regarding residential mortgages and sponsorship practices.

According to the complaint filed on May 3, MortgageIT endorsed more than 39,000 mortgages between 1999 and 2009 for Federal Housing Administration (FHA) insurance, totaling more than $5 billion in underlying principal obligations. The complaint states that MortgageIT repeatedly made false certifications to HUD to ensure that the FHA insurance was granted, despite the fact that they were not eligible under HUD rules. MortgageIT allegedly did not conduct the due diligence required by HUD and put millions of FHA dollars at risk by wrongfully obtaining approval of these ineligible mortgages.

In addition, MortgageIT and Deutsche Bank allegedly did not implement required quality control procedures despite falsely certifying to HUD that they had.

The government complaint seeks treble damages and penalties under the False Claims Acts for insurance claims paid by HUD for wrongfully endorsed mortgages, as well as seeking compensatory and punitive damages for breach of fiduciary duty, gross negligence, negligence and indemnification of future insurance claims.

Read the entire press release, “United States Sues Deutsche Bank and Subsidiary MortgageIT for Years of Reckless Lending Practices”