justjohn
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|  | Deutsche Bank admits US mortgage fraud
« Thread Started on May 11, 2012, 7:47am » | |
BBC News Business
10 May 2012 Last updated at 17:10 ET
Deutsche Bank admits US mortgage fraud
Germany's Deutsche Bank has agreed to pay $202m (£125m) to settle charges it defrauded the US government over the resale of risky mortgages.
The US Department of Justice said Deutsche's MortgageIT subsidiary lied to get Federal Housing Administration (FHA) insurance for its loans.
The bank admitted responsibility, which cost the federal government $386m when the mortgages defaulted.
Deutsche said it wanted "to put this issue behind us".
FHA rules state lenders must make sure the borrower will be able to repay the loan, but the justice department had argued Deutsche did not do so.
Deutsche bought MortgageIT for $430m in 2007.
The government said that between 1999 and 2009, MortgageIT endorsed more than 39,000 mortgages for FHA insurance and the lender had powerful incentives to generate as many FHA-insured loans as it could so that it could then sell them on to investors.
On Thursday, federal prosecutor Preet Bharara said Deutsche treated the federal insurance as "free government money to backstop lending practices that did not follow the rules".
"Their failure to meet these requirements caused substantial losses to the government - losses that could have and should have been avoided."
As part of the settlement, Deutsche accepted responsibility that its executives "were in a position to know that the operations of MortgageIT did not conform fully" to US regulations.
The global financial crisis was sparked by mortgages being given to people who could not afford them, with the debt then being repackaged and sold on to investors.
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karl
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| | Re: Deutsche Bank admits US mortgage fraud
« Reply #1 on May 11, 2012, 11:17am » | |
J.J.
The hangmans noose is always just down the hall, these people found out the hard way..
Actually, it was Deutsche Bank AG, and their owned subsidiary: Mortgageit. In the stead of creating a different department, they ,Deutsche Bank, create a front company to represent the bank, with this, the main bank being: Deutsche Bank AG, is solely responsible to all dealing of their subsidiary. more or less as a parent to an underage child, so to speak.
Greed is no stranger to our shores any more then in the USA, eventually, the ax comes down, and a reasonable person would tend to believe it is not worth the loss of career and freedom from prison. But, as we see, this is not the case.
Well, as it would so appear, the officers of this financial institution got off light, for as the crime originated from our shores of responsibility, it occurred in the USA, and as so, comes under their laws to deal out the civil liabilities.
It takes money to make money, and as so of reality, money may not purchase happiness, but it sure will buy out a lot of problems.
Good presentation
{It would be nice if our new member: Mr. dominionlending were to speak a few words upon this subject}
Karl
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