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LA lawsuit claims Deutsche Bank is 'slumlord'
The suit, filed in Los Angeles County
Superior Court, accuses the bank of violating federal, state and city
laws and seeks potentially hundreds of millions of dollars in
reimbursements to the city and to evicted tenants.
The bank's
subsidiaries, Deutsche Bank National Trust Co. and Deutsche Bank Trust
Company Americas, are the city's largest slumlords, according to the
lawsuit.
The city attorney's office contends the bank failed to
act properly as trustee to more than 160 homes and other residences with
owners who couldn't meet their loan obligations during and after the
2008 international financial meltdown.
"It's time to recognize
that the fraud committed on Wall Street turns into blight on Main
Street," City Attorney Carmen A. Trutanich said at a news conference.
He
said the bank's subsidiaries acted as trustees for trusts composed of
mortgage-backed securities involving at least 2,000 properties across
the country.
The complaint focuses mainly on properties in
low-income areas of the city, specifically South Los Angeles and the
northeastern San Fernando Valley, but Trutanich said it could be amended
to include more homes if further problems are found.
The suit says Deutsche Bank broke a number of public nuisance and other laws.
The
bank allowed many homes and buildings to deteriorate into boarded-up,
graffiti-scrawled, trash-strewn eyesores that have led to increased
crime in neighborhoods and contributed to falling home prices, the city
alleged.
The lawsuit also contended that Deutsche Bank acquired
hundreds of foreclosed properties with tenants who were forced out
through "threats, small cash payments and baseless eviction actions"
that violated the city's rent stabilization ordinance and federal laws.
In
a statement, Deutsche Bank said loan servicers, not the lender as
trustee, are contractually responsible for maintenance of foreclosed
properties and any actions taken against tenants.
"For over a
year, we have offered to help the Los Angeles city attorney's office
contact the loan servicers that are responsible for maintaining the
properties in question, but they have refused our help and would not
even tell us which properties they were talking about," the bank said.
Trutanich
maintained that Deutsche Bank, and not the loan servicers, are on the
hook for maintenance and other costs on the lender's properties.
"They took control of the assets. That's their job," he said.
The city's complaint is unrelated to a lawsuit filed by the federal government on Tuesday against Deutsche Bank.
That
lawsuit accuses the lender of mortgage fraud and seeks to recover
hundreds of millions of dollars in insurance claims that the government
has had to pay when homeowners defaulted on their mortgages.
Copyright 2011 The Associated Press. All rights reserved. This
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