The United States government sued Deutsche Bank yesterday, accusing it of lying about the quality of home loans it handled under a government program and demanding that the bank repay hundreds of millions of dollars of losses on those loans, according to an article in today's edition of The New York Times by Louise Story.

The article said that "the mortgages, guaranteed by the Federal Housing Administration, are expected to cost the government more than $1 billion" and that "they came from loans issued by a company called MortgageIT, which Deutsche acquired in 2007."

"The F.H.A.," the article continued, "said it discovered the fraud in 2009, while reviewing its overall portfolio. At the time, loans were defaulting at record levels and worries were growing about the ultimate cost to taxpayers. Since the financial crisis, the F.H.A. has broadened its role in the housing market and now backs about one-third of all new mortgages, up from just 5 percent a few years ago. In the last couple of years, the F.H.A. has also overhauled its processes to improve quality control, and loans made more recently are performing better."

Officials from the Justice Department and the Department of Housing and Urban Development said the lawsuit should serve as a warning to other lenders that are issuing loans using a government guarantee, the article noted.

"At a news conference on Tuesday, the United States attorney for the Southern District of New York, Preet Bharara, said Deutsche 'cannot get away with lies and recklessness,'" but "he said there was not evidence to justify a criminal complaint and declined to say whether there would be more cases claiming F.H.A. fraud."

The bank issued a statement responding to the government's case, filed in Federal District Court in New York, saying it was not involved in most of the 39,000 loans cited in the complaint. It said that "almost 90 percent were issued before the bank acquired MortgageIT, a real estate investment trust, the bank said. At the time of its acquisition, MortgageIT had been operating under H.U.D. oversight for nearly a decade."

"We believe the claims against MortgageIT and Deutsche Bank are unreasonable and unfair, and we intend to defend against the action vigorously," the bank statement said.

According to the government's complaint, "of the MortgageIT loans backed by the F.H.A. from 1999 to 2009, worth $5 billion in total, about one-third have defaulted."

The article noted that "MortgageIT was not a large F.H.A. partner - it ranked 33rd by volume at the end of 2008 - and it stopped issuing government-backed loans in 2009.

The complaint against Deutsche Bank, the article said, "stands out because the government has filed relatively few cases against big banks related to the financial crisis. Its actions have mainly been civil complaints, as was the one against Deutsche Bank. The government has found it difficult to prove intent to defraud, a requirement for a criminal case, and investigators got off to a slow start in building possible cases during the crisis because regulators were primarily focused on stabilizing the system. The Justice Department has generally had more success prosecuting small mortgage brokers and borrowers for mortgage fraud than it has had in pursuing major financial institutions."

The Deutsche suit is not centered on the subprime loans that kicked off the housing collapse, but, the article said, Deutsche was "a large player in the subprime market, and mortgage bonds created by the bank sit in many investors' portfolios."