New York: A branch of the US Department of Justice is investigating whether Deutsche Bank filed false documents and attempted to mislead a bankruptcy judge in a foreclosure action.
Although the investigation involves the case of only one homeowner in Connecticut, a court document filed on Wednesday by the United States Trustee's Office said it wants to elicit information about Deutsche Bank's practices in general in foreclosure cases.
The inquiry involves Deutsche Bank National Trust Co, the Deutsche Bank unit that acts as trustee for thousands of trusts that invested in mortgage-backed securities. The US Trustee's Office is a division of the Department of Justice responsible for overseeing administration of bankruptcy cases.
In recent months, the office has stepped up efforts around the US to block banks and law firms from using false or fabricated documents in home foreclosure actions. The effort follows disclosures in October 2010 of large-scale "robo-signing", the mass signing of foreclosure affidavits containing "facts" that had never been checked, and wide production of false mortgage assignments.
The court motion on Wednesday stated "The United States Trustee has reviewed the documents filed by Deutsche in this case and has concerns about the integrity of those documents and the process utilised by Deutsche in" filing to foreclose.
Jane Limprecht, spokeswoman for the US Trustee's office, confirmed the examination was part of a nationwide effort begun by the office in recent months to investigate suspected improper actions by banks and other mortgage servicers in foreclosure cases.
She declined to comment on the specific examination of Deutsche Bank in the case.
April Charney, a Florida legal aid attorney representing homeowners in foreclosure cases and an expert on mortgage securitisations, said besides possible sanctions against Deutsche Bank in this foreclosure case, the results could have significant effect on Deutsche Bank's practices in general, and on its ability to foreclose on large numbers of homeowners in default.
Lawyers for homeowners in foreclosure have alleged similar practices by Deutsche Bank in cases around the country.
Charney said the evidence elicited in the inquiry could apply to many other Deutsche Bank foreclosures by putting the bank on notice that its practices have not been legal, and that it may lack the basic authority even to bring many of the foreclosure cases.
The document said Deutsche Bank never presented evidence in the case that it was ever authorised to serve as trustee for the trusts.
Mortgage assignments are needed to prove that a trust owns the mortgage and has authority to foreclose, but in many cases banks that originated the mortgages never gave the trusts the required assignments.
