Manhattan, NY, United States (AHN) – Deutsche Bank sought the dismissal of a $1-billion U.S. lawsuit filed by the U.S. government against the largest German bank and its mortgage unit.

Deutsche Bank, in a court filing, said the lawsuit failed to state the basis for holding Deutsche Bank liable for acts that the bank claimed happened before it acquired its MortgageIT unit.

Washington filed the lawsuit against Deutsche Bank and MortgageIT on charges that the two falsely certified they properly assessed the default risk of mortgages, which led to thousands of risky borrowers qualifying for loans for insurance with the Housing and Urban Development Department. The U.S. government filed the lawsuit on May 3 with a Manhattan federal court.

The federal government sued the German bank under the False Claims Act, which allows Washington to seek triple damages and penalties beyond $1 billion.

The loans endorsed by MortgageIT since 1999 were more than 39,000, of which 12,500 defaulted.

Aside from the federal government, Los Angeles also sued over the foreclosed property Deutsche Bank, whom city officials blamed for the large number of abandoned homes. Aside from making the city ugly, the units attract criminals and vagrants, cause home values to slide down further, and cost the cash-strapped city more to care for the decaying houses.

To address this growing problem, Illinois legislators filed a bill that would allow cities to enforce laws on vacant properties against banks that foreclose homes. Maryland legislators are seeking stiff penalties or banks and lenders that fail to maintain properties to local standards.

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