I read an article earlier today that made me gasp (which in the new vernacular means that it was compelling enough for me to hit the "share" button and comment). The US Government has filed a lawsuit against Deutsche Bank. That's the good news. The bad news is that it involves $1.274 BILLION that HUD - that's us - has paid, or in the process of paying, this ONE bank, for bad loan insurance claims.
The heartbreaker is that this is really about bailing out a bank, not for mortgages that it originated (which would legitimize the HUD compensation), but for a bad investment decision Deutsche Bank made in 2007 when it bought a subprime/Alt-A lender, MortgageIT.
How did a lender who "specializes" in subprime/Alt-A mortgages EVER get approved to originate HUD insured loans? From my brief internet foray into researching MortgageIT, it doesn't look like they did. They simply bought HUD backed loans from "small to mid-sized banks, credit unions and mortgage bankers" to enhance the marketability of their own portfolio. The one that Deutsche Bank bought off on.
That being said, I know that Deutsche Bank is not stupid. I know that Deutsche Bank did their due diligence. I know that Deutsche Bank got burned. Wait, did they?
Deutsche Bank Posts Best 1st Quarter Since 2007
Executive Summary? Deutsche Bank Net Profits Up 17%
Shame on us ...
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