By Aruna Viswanatha
Oct 17 A unit of Deutsche Bank AG
will pay $11.5 million to resolve a probe of its role in funding
subprime mortgage loans in Nevada, the state's attorney general
said on Thursday.
The investigation focused on mortgage loans provided by
other lenders but funded, bought and securitized by DB
Structured Products Inc between 2004 and 2007, Attorney General
Catherine Masto said.
At issue was whether the other lenders misled borrowers
about the actual interest rates on their loans or piled on risky
features without considering a borrower's ability to repay, and
whether Deutsche Bank knew about such practices when it helped
to finance the loans.
The bank neither admitted nor denied the state's allegations
but agreed to review any future Nevada loans it helps to finance
for similar problems.
"I remain committed to enforcing Nevada's laws against the
players - including those on Wall Street - that contributed to
and profited from mortgage lending and sales practices that
misled Nevada consumers into loans that they did not understand
and could not repay," Masto said in a statement.
Deutsche Bank spokeswoman Renee Calabro said the bank was
pleased to resolve the matter.
The money from the settlement will be used to pay some
affected borrowers and cover the costs of the investigation,
Nevada, one of the states hardest hit by the recent housing
crisis, has also since been one of the most aggressive in
pursuing cases against financial institutions that funded risky
loans that fueled the crisis.
In the past two years, units of Royal Bank of Scotland Group
plc and Morgan Stanley entered into similar
settlements with the state, paying $42 million and $40 million,