Deutsche Bank Resolves Its Single Largest Mortgage-Related Litigation Case

Deutsche Bank (XETRA: DBKGn.DE / NYSE: DB) announced today that it has reached an agreement to resolve its residential mortgage-backed securities litigation with the Federal Housing Finance Agency (FHFA) as conservator for Fannie Mae and Freddie Mac. As part of the agreement, Deutsche Bank will pay EUR 1.4 billion.

The FHFA made claims against 17 financial institutions in relation to residential mortgage-backed securities, including Deutsche Bank. To date, details of settlements with two other institutions have been disclosed.

The agreement resolves Deutsche Bank’s single largest mortgage-related litigation case. It resolves allegations that between 2005 and 2007 the Bank did not provide adequate disclosure about certain residential mortgage-backed securities sold to Fannie Mae and Freddie Mac.

The settlement also includes an agreement with the FHFA to resolve past and future claims seeking to have Deutsche Bank repurchase mortgage loans underlying certain residential mortgage-backed securities purchased by Fannie Mae and Freddie Mac that the FHFA has asserted breached certain representations and warranties.

Jürgen Fitschen and Anshu Jain, Co-Chief Executive Officers of Deutsche Bank, said: “Today’s agreement marks another step in our efforts to resolve the Bank’s legacy issues, and we intend to make further progress in this regard throughout 2014.”

They added: “We have exited the mortgage businesses that gave rise to these claims and have further improved our controls.” 

As part of Strategy 2015+, Deutsche Bank is investing EUR 1 billion to elevate its systems and controls to best in class. 

The settlement amount is already substantially reflected in the Bank’s existing litigation reserves and no material additional reserves will be taken for this settlement.