From the New York website: Deutsche Bank may fund billions in new home loans to low-income borrowers as part of a settlement with the United States Justice Department.
In January, the German lender reached a $7.2 billion deal with prosecutors to settle an investigation into its pre-crisis mortgage bond deals. As part of the settlement, the bank agreed to offer $4.1 billion in “relief” to borrowers.
Initially, Deutsche Bank had planned to do so by lending to firms that buy and restructure delinquent mortgages. But Bloomberg reports the bank is now finding that there simply aren’t enough of those, almost nine years after the financial crash.
So the bank is looking to provide so-called warehouse loans to lenders that issue new mortgages to borrowers with poor credit. These loans allow mortgage issuers to bridge the gap between issuing loans to homeowners and bundling them as bonds and selling them off to investors.
“The people hurt most by Deutsche Bank and Wall Street are low-income people, so the interest is to reach into that community and help them with down payment assistance or loans that they couldn’t otherwise get,” Ira Rheingold of the National Association of Consumer Advocates told Bloomberg [Bloomberg] — Konrad Putzier