Thursday 17 October 2019

Deutsche Bank breaks pledge to help US homeowners hit by mortgage crisis

 

Deutsche Bank has decided that none of the more than $4bn (€3.5bn) it promised to spend on consumer relief after the global mortgage crisis will go to distressed US homeowners. Stock photo: PA
Deutsche Bank has decided that none of the more than $4bn (€3.5bn) it promised to spend on consumer relief after the global mortgage crisis will go to distressed US homeowners. Stock photo: PA

Tom Schoenberg

Deutsche Bank has decided that none of the more than $4bn (€3.5bn) it promised to spend on consumer relief after the global mortgage crisis will go to distressed US homeowners, according to a report by the monitor of the 2017 settlement. Instead, the consumer-relief money will be spent on originating new loans, according to the report by the bank's monitor, Michael Bresnick.

The decision reverses pronouncements by the bank and the US Justice Department that some of the funds - part of a $7.2bn settlement over bad mortgage bonds sold before the 2008 crisis - would go to aiding people who were in imminent risk of defaulting on their mortgage payments, have especially high interest rates or owe more on their mortgage than in the value of their home.

The change in plans "may disappoint distressed homeowners and others, including the many individuals who have reached out to the monitor over the past two years, hoping to receive different types of consumer relief from the bank," Bresnick wrote in the report. Bresnick, a partner at the law firm Venable and a former US prosecutor, declined to comment. The Justice Department didn't have an immediate comment.

The bank said in a written statement that its consumer-relief programme has provided financing to more than 190,000 homeowners, specifically to low- to moderate-income homeowners in areas hit hard by the financial crisis.

Bloomberg

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