U.S. sues Deutsche Bank over mortgage approvals

Reporting from New York—

The federal government is seeking more than $1 billion from Deutsche Bank in a fraud lawsuit that could open a new front in a campaign to punish companies that churned out the low-quality mortgages blamed for sparking the financial crisis.

The lawsuit filed Tuesday in Manhattan federal court says the German financial giant’s New York-based home lender, MortgageIT, recklessly approved 39,000 mortgages for government insurance from 1999 to 2009 “in blatant disregard” of whether borrowers could make the required monthly payments.

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