According to reports in the Financial Times, the US justice department said in a civil lawsuit that Deutsche and its subsidiary MortgageIT knowingly misinformed the Federal Housing Administration (FHA) over mortgages that qualified for federal insurance.
Preet Bharara – US attorney for the Southern District of New York – said in a statement that Deutsche admitted to some of the misconduct. He added: ‘MortgageIT and Deutsche treated the FHA insurance as free government money to back-stop lending practices that did not follow the rules.’

Incorrect statements

The settlement showed that Deutsche accepted MortgageIT did not meet all applicable rules set by the FHA and the Department of Housing and Urban Development (HUD), with the subsidiary acknowledging that certain subscriptions were submitted to the HUD incorrectly stating loans were eligible for insurance.

Exposures

Deutsche said in a statement: ‘We are very pleased to have reached this settlement for which we have already fully reserved, and to put this behind us. This marks a step in resolving our mortgage related exposures.’