US prosecutors: Deutsche Bank was aware of mortgage fraud

Germany's Deutsche Bank was aware of fraud being committed by a US subsidiary that issued thousands of bad mortgages before the 2008 financial crisis, US prosecutors have alleged.

US prosecutors: Deutsche Bank was aware of mortgage fraud
Photo: DPA

The US Department of Justice detailed the allegations in an amended lawsuit filed this week with a New York court, hitting back at Deutsche Bank’s claim that it was not responsible for the actions of MortgageIT, a home finance business it took over in January 2007.

“Following the merger, MortgageIT continued its wrongful conduct. And, it did so with the knowledge and/or participation of Deutsche Bank,” the department said.

The department is seeking more than $1 billion in damages from the German banking giant over alleged fraud committed by Mortgage IT, which was a major mortgage lender before the 2007-08 collapse of the US housing market.

In its lawsuit originally filed in May, the department accused MortgageIT of failing to follow proper quality-control procedures when it insured home loans with the US Federal Housing Administration (FHA).

Of the 39,000 home loans worth more than $5 billion that MortgageIT insured with the FHA prior to 2009, nearly 13,000 are now in default, leaving US taxpayers to pay the bill, the department says.

In Monday’s amended filing, the department said about 30 percent of the FHA-insured loans that MortgageIT originated before Deutsche Bank took over ended up in default.

After January 2007, the Justice Department said, the problem only “got worse”, with the percentage that went bad rising to 46 percent.

The rampant issuing of mortgages to unqualified borrowers unable to repay them fuelled a bubble in US home prices that popped in 2007-08, triggering the global financial crisis.


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Travel: Germany downgrades Covid-19 risk status of USA

The United States is no longer classed as a "high incidence area" by Germany - it has returned to being a "risk area".

Travel: Germany downgrades Covid-19 risk status of USA
People walking in New York in May 2020. Photo: DPA

The Robert Koch Institute (RKI) changed the risk classification of the United States on March 7th.

The US was previously classed as a “high incidence area” by the RKI. These are regions where the incidence is over 200 Covid-19 cases per 100,000 residents with a period of seven days.

However, now it’s a “risk area” – which is used by German authorities to describe a region with an increased risk of infection, usually above 50 coronavirus cases per 100,000 people in seven days.

Other factors are also taken into account, such as measures in place.

It means the travel requirements for people coming from the US to Germany have changed.

However, entry from the US is only permitted in a few narrow exceptions. Proof of urgent need to travel is required, German authorities say. You can find more information in the story below.

READ MORE: When are Americans allowed to travel to Germany?

What happens if I need to travel from the US to Germany?

If you are a German resident from the US, or fall into one of the exception categories, you still face strict testing and quarantine measures.

All travellers must have a negative Covid-19 test result at the latest 48 hours after they enter Germany. It must be presented to authorities if they request it.

Some individual airlines may however still say that travellers have to present a coronavirus negative test result before boarding is allowed. You should contact your airline before travel to check.

Both PCR tests as well as rapid anitgen tests are accepted if they meet the quality standards. Testing is still mandatory even if travellers are vaccinated or have recovered from a coronavirus infection. 

People returning from “risk zones” are required to self-isolate for 10 days after they arrive.

The quarantine can usually be ended with a negative coronavirus test result taken at the earliest five days after arriving in Germany.

However, states can differ on their travel regulations so check with your local authority before travelling.

Everyone entering Germany is also required to register online.

New “high incidence areas”

In the RKI’s latest travel classification list, Sweden, Hungary and Jordan are now classed as “high incidence areas” which means stricter testing and quarantine rules apply.

Areas of “variant concern” include Austria’s Tyrol region, the UK, Brazil, Portugal and Ireland. Even stricter rules apply for these regions.

You can find out more information about travel rules in our story below.

READ MORE: What you need to know about Germany’s latest rules on foreign travel