The US Justice Department has sued Deutsche Bank for more than $1bn (£600m) for defrauding the government.
The complaint says Deutsche’s MortgageIT subsidiary lied in order to get Federal Housing Administration (FHA) insurance for its loans.
FHA rules say lenders must make sure the borrower will be able to repay the loan, but the Justice Department claims Deutsche did not do so.
A Deutsche spokesperson described the claims as “unreasonable and unfair”. “We intend to defend against the action vigorously,” she added.
The lawsuit is one of the first targeting mortgage lenders under the federal False Claims Act.