The federal government has sued Deutsche Bank for alleged widespread fraud that resulted in millions of dollars paid to the bank. According to the lawsuit, and as a direct result of the purported fraud, the bank padded its pockets with undeserved income as it repeatedly lied to benefit from a government program that insured mortgages.
The lawsuit is seeking to recover hundreds of millions of dollars the federal government had to pay in insurance proceeds when many borrowers defaulted on their mortgages. The lawsuit alleges that the bank repeatedly and brazenly engaged in a pattern of reckless lending for mortgages that were really ticking time bombs, sometimes failing to even verify that the applicant had a job.
This lawsuit is the direct result of the ongoing investigation of federal regulators and Attorney General’s in all 50 states. They have been investigating lenders accused of cutting corners and using forged documents to foreclose on many homeowners. In some cases, employees of financial institutions engaged in so-called robo signing.
Moreover, allegations of robo signing, fraud, documentation errors, issues with process servers, problems servicing loan modifications, and other similar issues, have prompted many lenders to slow down the foreclosure process which in turn has slowed down the housing recovery. Florida’s Attorney General eventually announced an investigation into these alleged practices.
The lawsuit is specifically seeking to recover more than $386 million at the Department of Housing and Urban Development has paid out in insurance claims and related cost. HUD sets the rules for the FHA mortgage insurance program, including requirements relating to the adequacy of the borrowers income to meet the mortgage payment requirements, the borrower’s credit worthiness and the appropriateness of the valuation of the property being purchased.
In this instance, the federal government is alleging that the bank failed to comply with those requirements. Moreover, the federal government is also alleging that the bank just flat out lied when asked instead requirements were actually being complied with. Indeed, the quality control violations were egregious, and that includes the bank’s failure to review all early payment defaults and failed to implement minimal quality control processes. The lawsuit further alleges that the bank actually hired an outside vendor for purposes of reviewing its loan process, but failed to adherence to any of the recommendations adhered to by the third-party vendor. Indeed, the lawsuit alleges that the bank received the recommendations and never even opened the letter.
Today’s current real estate market, and ongoing foreclosure crises, presents all sorts of issues that must be properly navigated. There are many factors contributing to Florida’s nation leading delinquency rates. They include a weak job market, weak economic recovery, and a major drop in home prices. Consequently, Florida’s housing market remains unsettled in large part due to the continued foreclosure crises.
Our Miami foreclosure defense lawyers have assisted many homeowners in buying enough time to reach the solution that is right for them. There are many alternatives to foreclosure, and often times it just takes proper planning to properly navigate against the potential pitfalls. Help is often available to those who seek it.