Deutsche Bank sued for USD 1 billion

Wu Yongda Hong Kong report local time May 3, the U.S. Department of Justice formally sued Deutsche Bank (hereinafter known as silver), the bank and its affiliated mortgage IT companies have repeatedly used fraud to obtain the mortgage obligations of the federal insurance pledge, and claimed 1 billion U.S. dollars.　　Deutsche Bank, the first mortgage lender to be sued for the Fraud Claims Act (False Claims Act), bought mortgage IT at about 429 million dollars at the height of the credit bubble (the deal was completed in January 2007). Preetbharara, the prosecutor responsible for the prosecution, alleges that over 39,000 mortgages were approved by the company from 1999 to 2009 with the Federal Housing Authority (FHA) guaranteed loans of more than 5 billion dollars.　　Deutsche Bank then profited by selling the mortgage assets.　　However, the Deutsche Bank spokesman denied the allegations. "Not due diligence" survey in 1999-2009, mortgage it participated in the U.S. Housing and Urban Development (HUD) under the Federal Housing Authority (FHA), "Direct support lenders" (directendorsement lender) Project, Have the right to grant loans secured by FHA.　　The project requires the participating agencies to follow the HUD rules to carefully approve the loan and to enforce a quality control (QC) procedure.　　As a rule, the secured loan is subject to due diligence prior to approval, understanding the borrower's financial position and the real situation of the transaction, which is performed by the direct lenders rather than FHA or HUD.　　However, prosecutors Preetbharara said the bank was seriously violating the project rules, ignoring the requirement that borrowers be able to repay their mortgages. FHA data show that in 2004, the company granted a home loan in Colorado Wenquan, in the face of the borrower does not have a credit record, the company did not collect housing rentals, car insurance, utilities and other payment information to build records for evaluation, but directly granted loans.　　As a result, the borrower defaulted after 6 months. What's worse, a loan from a real estate in Texas, the application information on the status of the borrower's statement is contradictory, at the same time both in X company, and in Y Company, unexpectedly no one found and questioned, the same grant loan.　　In less than 5 months, the borrower defaulted. Those with real estate agents said the mistakes of the two cases were "very low".　　In other cases, the buyer's "sponsorship" of the seller's down payment, a false statement of the value of the assets and so on, I am afraid it is more impossible to be found. Fake QC in 2004, mortgage IT company hired outside personnel to establish a set of QC (quality control) procedures and to re-examine approved loan cases. Soon, the problem was discovered and the company was informed by letter. However, the letters were put aside without unpacking until early 2005, when the company's first QC Manager to find again after the post and read.　　But the problem has not turned.　　The QC manager tries to establish a system within the company: The screened case is first examined by an external person, and if there is a problem, the QC manager will make a statement to the branch that requested the loan, and the QC manager will then make a problem assessment and report to the management.　　However, the system has never been successful, and QC managers have often failed to respond to questions from the lending branch, although they have complained to management, but the situation remains. More absurd is the company in the QC procedure personnel arrangement. The QC manager should have a certain staff to assist in the work, but the fact is commander.　　During the first quarter of 2006 to the end of the operation in 2009, a government loan auditor was the only person in the company who was involved in the QC process, who was also diverted in 2007. The indictment specifically mentions one case. Both the External Auditor and the company's QC manager have found a series of default cases in the Michigan division that are related to a lender and an intermediary and advise management to take action.　　It was not until 2006, when HUD discovered and informed the company, that the company dealt with the problem. Faced with these problems, the company's management has repeatedly said in the annual inspection that it has been corrected, and executives have repeatedly signed a statement that the company complied with the relevant code.　　But the results were not as they claimed, and the problem continued until the company ended its operation in 2009.　　FHA says it has paid 386 million of billions of dollars in insurance and related costs for these loans, and that there are still 888 million dollars to be paid, and in the future the amount of compensation may be even greater. A Deutsche Bank spokeswoman said: "We have just received a lawsuit and are currently discussing it." We believe that the allegations against mortgage it and the bank are unreasonable and unjust. At the same time, the spokesman said they would defend the lawsuit.