As Ontario foreclosure defense lawyers, we were already interested to see a federal lawsuit accusing German banking giant Deutsche Bank of lying to the federal government about the soundness of its mortgage lending practices. That lawsuit, filed by the Justice Department in New York May 3, alleges that Deutsche Bank's home lender, MortgageIT, made loans without evaluating whether borrowers could make payments and repeatedly lied to the government about it to get government insurance. The very next day, the city of Los Angeles followed with another lawsuit against Deutsche Bank, calling it a slumlord that wrongfully evicts tenants to sell buildings and allows properties to become unlivable eyesores, sometimes when people were living in them.
The federal lawsuit concerns the cost to the Federal Housing Administration of insurance payments on MortgageIT loans, which is currently $386 million and projected to rise to $1.3 billion. The U.S. Attorney for New York accuses MortgageIT of approving loans with no effort to investigate whether borrowers could afford them; many such loans were later undled into securities and sold. This allows the original lender to avoid any financial liability when the loan goes under, but failed securitized loans eventually triggered a financial crisis. The government said one MorgageIT loan was approved on the basis of a current employer, but the borrower had never worked for that employer, and the loan went into default in four months. An outside consultant to MorgageIT raised concerns in 2004, the government says -- but the company responded by putting the consultant's reports in a closet without reading or opening them.
The Los Angeles lawsuit accuses Deutsche Bank of allowing more than 2,000 foreclosed properties to go unmaintained so long that they became eyesores, drove down property values and attracted squatters and crime. The city is arguing that Deutsche Bank let the foreclosed properties go because it could no longer make money from them. It also accused the bank of refusing to work with tenants living in properties at the time of foreclosure, but instead illegally harassing and evicting them to make room for more lucrative buyers. This is the second such claim by a U.S. city; the city of Cleveland had a similar case dismissed. Advocates from the city of Milwaukee went directly to a Deutsche Bank shareholder meeting to complain about the terrible conditions of its properties.
Our Orange County foreclosure defense attorneys work with individual homeowners, not large governments. But many of the complaints in these two lawsuits are the same complaints made by homeowners whose rights are being violated. If the federal government's allegations are true, Deutsche Bank's deliberate actions contributed to the housing crisis that is affecting all homeowners now. It may also be complicit in a form of predatory lending that convinced borrowers they could afford homes they couldn't, so the bank could securitize them for a profit later. And in the Los Angeles suit, if the allegations of illegal eviction are true, it's not hard to believe Deutsche Bank might have used the same unethical tactics to force borrowers into foreclosure in the first place. We look forward to having these issues explored in a court of law.
If you're facing wrongful or avoidable foreclosure by Deutsche Bank or any other major lender, you should call Howard Law PC right away. We have represented borrowers against major lenders and loan servicers throughout the housing crisis, so we understand all of the most common tricks and delaying tactics used by servicers to railroad borrowers into foreclosure. Perhaps even more importantly, we understand clients' rights under California and federal predatory lending laws, HAMP rules and more. When necessary, our Torrance foreclosure defense lawyers can file a request to stop an unfair foreclosure sale right away, so your case has time to be heard by an impartial judge before your home is sold.
Howard Law offers free, confidential case evaluations, so you risk nothing by telling us about your case and hearing about your options. To set up a meeting, send us an email or call toll-free at 1-800-872-5925.