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* Ping An CFO sees investment opportunities in U.S. and Europe
* Allegations Deutsche Bank filed false documents
* Inquiry could affect foreclosures across United States
* Testimony demanded from Deutsche Bank officials
By Scot J. Paltrow
NEW YORK, Jan 28 A branch of the U.S. Department of Justice is investigating whether Deutsche Bank (DBKGn.DE) 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 Jan. 26 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 U.S. Trustees' 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 United States 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 Jan. 26 court motion stated that "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 utilized by Deutsche in" filing to foreclose.
Jane Limprecht, spokeswoman for the U.S. Trustee's office, confirmed that 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 who represents homeowners in foreclosure cases and who is an expert on mortgage securitizations, said that aside from 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 that Deutsche Bank never presented evidence in the case that it was ever authorized 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. The inquiry also could have an impact on other banks that act as trustees and mortgage loan servicers, if it establishes that the type of procedures used by Deutsche Bank were illegal.
The document was filed in federal bankruptcy court in Connecticut by Tracy Hope Davis, the U.S. Trustee for New York, Connecticut and Vermont.
The case involves Tiffany Kritharakis, a Norwalk, Connecticut, homeowner who filed for personal bankruptcy in June 2010. It seeks an order requiring Deutsche Bank to provide officials to testify in the inquiry, and making it turn over large quantities of documents, including on Deutsche Bank's policies for handling foreclosure cases.
Davis' motion states that Deutsche had filed to foreclose even though it had no proof that MAC Mortgages, the originator of the loan, had ever given ownership of the mortgage to Deutsche as trustee for the investors' trust.
It cited evidence that Deutsche had filed a false mortgage assignment in the case in an attempt to persuade the bankruptcy court that it owns the mortgage. Dated June 11, 2010, the assignment was by Sand Canyon Corp. to Deutsche.
Sand Canyon purportedly had acted as an intermediary between the loan originator, MAC, and Deutsche. But the motion noted that Sand Canyon had completely exited the mortgage business in 2008, and so in 2010 had no mortgages that it could assign.
It also alleged that the foreclosure action against Kritharakis was filed by a Texas attorney who is not licensed to practice law in Connecticut, and said there was no indication that the lawyer had made any effort to determine whether Deutsche had legal standing to foreclose.
If the U.S. Trustee inquiry determines that wrongdoing occurred, it could ask the bankruptcy judge to impose sanctions, including specific restrictions on Deutsche Banks' actions in foreclosure cases, and financial penalties.
John Gallagher, a Deutsche Bank spokesman, said the bank would not comment on details of the U.S. Trustees' motion.
But in an e-mailed statement he said that any steps taken in the case had been the responsibility of the loan servicer, not Deutsche Bank.
Servicers handle routine tasks, such as collecting mortgage payments, tracking defaults, and initiating foreclosure actions. But the court documents show that the foreclosure action, technically known as a "proof of claim," was filed by Deutsche Bank itself.
Lawyers expert on loan securitizations said that the servicers work for the trustees, which directly represent the interests of the mortgage trust investors. Gallagher did not say whether Deutsche Bank would contest the U.S. Trustee's motion.
The case is In re: Tiffany M. Kritharakis, Debtor, United States Bankruptcy Court, District of Connecticut, Bridgeport Division No. 10-51328 (Editing by Toni Reinhold)
* Ping An CFO sees investment opportunities in U.S. and Europe
WASHINGTON, Dec 9 The U.S. Senate passed legislation on Friday to fund the government through April and sent it to President Barack Obama for signing into law, after Democrats who sought more generous healthcare benefits for coal miners stopped delaying action on the measure.
WASHINGTON, Dec 9 A bill to fund the U.S. government cleared a procedural hurdle in the U.S. Senate on Friday and appeared poised to pass the chamber, averting a government shutdown.