Deutsche Bank is to pay 1.4 billion euros ($US1.9 billion) to settle a lawsuit with the Federal Housing Finance Agency in the United States.
The German bank was accused of breaking state and federal laws when it sold financial products backed by mortgage loans to Fannie Mae and Freddie Mac between 2005 and 2007.
Freddie Mac and Fannie Mae had to be bailed out by the federal government in 2008.
They play a key part in the US housing market by buying mortgages and repackaging them into guaranteed bonds.
But the BBC reports the collapse in house prices after 2008 left them with $30 billion in losses and exposed flaws in some of the products that banks had sold to them.
Bank of America, Citigroup, JP Morgan Chase, Wells Fargo and others have been involved in similar settlements.