Mortgage-related legal claims hit $780m as backlash begins

DEUTSCHE Bank yesterday said it faces less than $1bn (£635m) of claims over mortgage-related securities it helped arrange, amid a growing backlash by clients seeking to recoup losses tied to the credit crisis.

The bank’s chief financial officer Stefan Krause told a conference call that Deutsche currently has “approximately $780m of pending mortgage repurchase demands”, adding that it has made “more than adequate” provisions for these claims.

Mortgage investors who bought home loans packaged into bonds are seeking redress following the poor performance of these assets.

The investors say many securities they bought should never have been sold to them, claiming they fell short of stated standards.

WoSome investors want banks to buy back the bonds.

Deutsche said it sees no material impact on profit from legal challenges over US mortgage foreclosure practices because it does not have a US mortgage loan servicing business.

The attorney general for all 50 US states is investigating whether banks that foreclosed on thousands of bad loans failed to review documents properly or submitted false information to evict delinquent borrowers.