The state of Maryland has reached a $95 million settlement with Deutsche Bank over claims of deception with their sale of residential mortgage-backed securities. Maryland Attorney General Brian Frosh announced the agreement earlier this month that includes a requirement that Deutsche Bank provides $80 million in relief to the state’s consumers. Municipal and local governments also stand to benefit from the deal as the agreement stipulates $15 million of the $95 million restitution going towards public investments.
Deutsche Bank is accused of providing misleading information to investors regarding securitization and collateralized debt offerings. All of the alleged turmoil ensued before the nation’s financial crisis that occurred nearly a decade ago. The Department of Justice accused Deutsche Bank of knowingly making false or misleading representations when soliciting to investors. Such fraud centered around the nature of mortgage loans that were issued between 2006 and 2007. The advances totaled in the billions and included private buyers as well as corporations, along with public entities such as city and county governments.
Deutsche Bank acknowledged its failure to provide investors with complete and accurate information, and thus agreed to a settlement that included relief to homeowners currently underwater because of the financial institution’s carelessness. The Department of Justice has mandated around $4.1 billion in aid going to such borrowers, with an $80 million portion of the most recent agreement set aside for consumers, accounting for some of the funding.
Mortgage forgiveness and forbearance are two of many ways that Deutsche Bank plans to make good with the public on the $95 million settlement. The financial institution also plans to implement low to moderate income lending along with affordable housing practices. Investing in the community as a whole will be another way that Deutsche Bank makes amends for its wrongdoing. The corporation has plans to contribute to housing stabilization for various cities and, as a result, help shore up the state of Maryland’s economy.
It seems that Deutsche Bank has had to answer up in recent months for some deceptive practices. The financial institution settled a federal mortgage probe in December 2016 in which it was ordered to pay a civil penalty totaling $3.1 billion. The final price tag for the investigation was $7.2 billion, which was a reduction from the initial $14 billion that the government initially proposed. The $4.1 billion relief expense imposed by the Department of Justice resulted from this probe and may have contributed to Deutsche Bank’s legal costs, which accounted for $2 billion in losses on the financial institution’s fourth quarter report.
Deutsche Bank was also found liable in a silver manipulation lawsuit in October 2016, and ordered to pay $38 million in damages. The financial institution is accused of employing manipulative device claims along with a myriad of other offenses that it was unable to refute effectively. The original class action lawsuit for this matter was filed in July 2014 and included other banks, which subsequently cleared their names and avoided substantial penalties over the alleged deceptive practices.
The most recent settlement between Deutsche Bank and the state of Maryland adds to the company’s total in legal bills and overall liabilities.
Only time will tell if more cases concerning Deutsche Bank result in losses, placing, even more pressure on the Frankfurt-based financial services company to revamp their policies.
I remember my first real estate class with Skip at Westford Collage of Real Estate years ago, and one of the first things he said was ‘full disclosure’. Never hide information about the deal. Today I’m the mortgage business (private hard money), I remember this comment. But I’m always surprised when I talk to borrowers who try to ‘hide pertinent facts’ about the deal. It’s a feeling that what you don’t know is none of our business. I partially get concerned when I ask borrowers questions, and three is a reluctance in telling the true story about the deal. when I look at those trouble loans that went off the deep end, there always was some shenanigans occurring by the borrower. Not telling the true story and hiding information about the transaction only to be discovered when the deal goes to foreclosure. Of course you know when the deal goes off the tracks, the borrower always wants to blame someone else, like the mortgage company or you the sales agent. My recommendation is to avoid these sketchy individuals that are trying to do some sneaky transactions. Usually my instincts tell me what’s going on, but sometimes they slip thru and cause problems. So beware, always disclose and hopefully your client will fully disclosed to you also.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
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About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.