Quote: 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.
The government says that between 1999 and 2009, MortgageIT endorsed more than 39,000 mortgages for FHA insurance.
It says that the lender had powerful incentives to generate as many FHA-insured loans as it could so that it could then sell them on to investors.
Deutsche Bank bought MortgageIT for $430m in 2007.
The government said it had paid out more than $386m in FHA insurance claims and related costs. | 
