Los Angeles Sues Deutsche Bank over Foreclosed Property Maintenance
The City of Los Angeles filed a lawsuit July 18 against Deutsche Bank, alleging that the Germany-based entity has failed to maintain foreclosed properties in the city and also has illegally evicted hundreds of renters, American Banker reported.
The 106-page complaint filed in Los Angeles Superior Court seeks hundreds of millions in restitution to be paid both to current and former tenants, as well as to the city for its repairs, inspections and penalties. Most of the properties in question are located in south L.A. or the northeast San Fernando Valley.
The Los Angeles Office of the City Attorney has called Deutsche Bank one of the city’s largest slumlords, American Banker reported.
Deutsche Bank contends that the city has sued the wrong entity since it only serves as trustee for the securitizations holding the mortgages in question. Therefore, the bank argued, it has no authority to foreclose on properties or evict renters.
“Loan servicers and not Deutsche Bank as trustee, are contractually responsible for both the maintenance of foreclosed properties and any actions taken with respect to tenants of foreclosed properties,” the bank noted in response to the filing, American Banker reported.
At issue are the more than 2,000 properties that the city claimed Deutsche Bank subsidiaries have obtained through foreclosure and have consistently failed to maintain or to address nuisance violations. The city further alleged in its suit that it has notified the bank of substandard property conditions, yet the bank has either not responded to the notices or failed to comply with city regulations, American Banker reported.
Deutsche Bank claimed it has tried to work with the city for more than a year to identify the addresses of subject properties in order to notify servicers of conditions in violation of city statutes, but that the city has failed to provide the addresses.