U.S. prosecutors have filed a civil lawsuit against Deutsche Bank, The Wall Street Journal reports. The suit, which seeks $1 billion, charges the lender and its MortgageIT unit for lying to the government to qualify thousands of risky mortgages for a government insurance program. MortgageIT authorized over 39,000 loans for the HUD-Federal Housing Administration (FHA) insurance after 1999, out of which 12,500 defaulted. HUD had to pay $386 million, as of February in insurance claims based on loans underwritten by MortgageIT and is set to pay an additional $888 million on loans that have defaulted. The lawsuit accuses MortgageIT of submitting mortgages that were not eligible for the FHA insurance program.
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