The Justice Department accused Deutsche Bank AG of "recklessly" lying about the quality of loans made by a mortgage unit of the German bank and guaranteed by the U.S. government.

In a civil lawsuit filed Tuesday in federal court in Manhattan, U.S. Attorney Preet Bharara sought to recover alleged damages and losses on mortgages insured by the Department of Housing and Urban Development, which could total more than $1 billion.

The 48-page lawsuit detailed what Mr. Bharara said was a decade-long disregard of basic underwriting standards and quality control at mortgage lender MortgageIT Inc., which was acquired by Deutsche Bank in 2007.

A Deutsche Bank spokeswoman said the "claims against MortgageIT and Deutsche Bank are unreasonable and unfair, and we intend to defend against the action vigorously." She added that about 90% of the activity covered by the allegations occurred before MortgageIT was bought by the bank.

During the housing boom, the German bank and other Wall Street firms bought lenders in order to feed their mortgage operations. Loans were pooled into mortgage bonds and sold to investors, a lucrative business at the time, but one that helped fuel the financial crisis and has come back to haunt the firms.