Deutsche Bank from flickr user ell brown.

The loans, which were issued by the Deutsche subsidiary MortgageIT, resulted in massive defaults just months after the closing date. Because they were insured by the federal mortgage insurance program, the costs of the defaults were passed on to the government.

"As of February, the government had paid more than $386 million in insurance claims and other costs for loans approved by the bank that went bad. The complaint says the government expects to pay hundreds of millions of dollars more to cover bad loans underwritten by the bank," the Washington Post writes.

The bank said they were not responsible for most of the 39,000 loans cited in the lawsuit.

"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, the bank said," the New York Times reports.

Financial Times reports that this is yet another black mark on Deutsche Bank's record:

"The complaint is another setback for Deutsche in the US. The bank was a prominent target in a recent Senate subcommittee report, which criticised its mortgage-linked trading practices during the crisis."

It's definitely not the first time the bank has been scrutinized for its practices. Today Reuters released a "factbox" showing a history of Deutsche Bank's run-ins with the law. Among them:

"April 29, 2011 - The European Commission said it was probing whether 16 major investment banks, including Deutsche Bank, colluded in operations in the credit defaults swaps market, which was already under scrutiny by U.S. authorities.

April 13 - A U.S. Senate report on the financial crisis criticised banks including Deutsche and Goldman Sachs (GS.N) for contributing to the "mortgage mess," referring to the contamination of the financial system with toxic mortgages.

March - Germany's top appeals court ruled against Deutsche Bank in a 540,000 euro ($766,000) damages claim over interest rate swaps. The court said the bank had consciously tailored the risk profile of the product "to the detriment of the investor."