As per the terms of the agreement, reached by representatives of the Frankfurt, Germany-based bank and the government, Deutsche Bank accepted that the firm failed to meet all federal housing regulations.
The bank was quoted by The Associated Press as saying that: "This marks a significant step in resolving our mortgage-related exposures."
The lawsuit sought compensation of over $386m from Deutsche Bank, which the Department of Housing and Urban Development paid out in FHA insurance claims and related costs arising out of MortgageIT’s approval of more than 3,100 mortgages, including 1,400 loans that have defaulted to date.
The compensation by Deutsche Bank is expected to significantly make up for the losses HUD incurred.
HUD sets the rules for the FHA mortgage insurance program, including requirements relating to the adequacy of the borrower’s income to meet mortgage payments, the borrower’s creditworthiness and the appropriateness of the valuation of the property being purchased.
