On January 17, 2017, the United States Department of Justice (DOJ) and Deutsche Bank AG, as well as its current and former subsidiaries and affiliates and ACE Securities Corp, reached an agreement to settle claims that Deutsche Bank violated federal law in connection with the packaging, securitization, marketing, sale and issuance of residential mortgage-backed securities between 2006 and 2007 (Settlement Agreement). The Settlement Agreement requires Deutsche Bank to pay a $3.1 billion civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), and to provide $4.1 billion in relief to underwater homeowners, distressed borrowers and affected communities.
Pursuant to the Consumer Relief portion of the settlement, Deutsche Bank is required to provide Consumer Relief which may take the form of loan modifications, including loan forgiveness and forbearance, to distressed and underwater homeowners, as well as financing for affordable rental and for-sale housing throughout the country. More specifically, options for Consumer Relief include:
Deutsche Bank’s provision of Consumer Relief will be overseen by an independent monitor, Michael Bresnick, who has authority to approve the selection of any third party used by Deutsche Bank to provide Consumer Relief. Under the Settlement Agreement, the Monitor was appointed to: (i) report quarterly on Deutsche Bank’s progress towards completion of the Consumer Relief portion of the Settlement Agreement; (ii) report on credits earned by Deutsche Bank; and (iii) determine and certify Deutsche Bank’s compliance with the terms of the Settlement Agreement.
Deutsche Bank must complete all Consumer Relief obligations under the Settlement Agreement by April 1, 2022. If a shortfall in any of the Consumer Relief obligations remains as of April 1, 2022, the outstanding amount of the remaining obligations shall begin to increase at a rate of 5% per annum, ending upon Deutsche Bank’s satisfaction of the outstanding Consumer Relief obligation.
To read more about the Monitor, please click here.