Los Angeles, fighting blight, goes after Deutsche Bank

Related article: Communities across the nation have made little progress in getting banks to maintain foreclosed properties, and as the ongoing crisis matures and bank-owned homes fall into advanced stages of disrepair, cities and residents are getting desperate.
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The city of Los Angeles is suing financial giant Deutsche Bank for allegedly letting many of the 2,000 houses it obtained through foreclosures to fall into disrepair, leading to crime and lower neighborhood property values. 

The city says it has repeatedly notified the company about the poor condition of the properties but the bank has not taken action to fix them. 

By neglecting the properties, Deutsche Bank has violated state law and city ordinances, according to the complaint filed in the Los Angeles County Superior Court. 

“We must fight blight by holding banks accountable when they create vacant nuisance properties that pose threats to our residents and destroy the quality of life in our neighborhoods,” City Attorney Carmen Trutanich said in a statement. 

Deutsche Bank did not respond to a request for a comment on the suit. 

In its lawsuit, the city says the foreclosure crisis caused the bank to change from a mortgage investor to a property owner when homeowners could not make their loan payments. 

As a result of foreclosures, Deutsche Bank has taken title to more than 2,000 homes and buildings in Los Angeles, many of which are in low-income neighborhoods, according to the suit. 

The city says the bank is obligated as a property owner to maintain its houses and buildings in good condition.  

However, the company has not taken any measures to keep vacant houses in good condition, the suit says.  The bank has not complied with a Los Angeles ordinance requiring that uninhabited properties be cleaned and barricaded, according to the complaint. 

The city says the vacant properties are a public nuisance because they attract crime and have caused neighborhood property values to decline.  

Los Angeles also says Deutsche Bank has neglected many foreclosed properties that are still inhabited, where the residents are living in substandard and dangerous conditions. 

Many of the bank’s inhabited buildings do not meet the requirements of the city’s building, electrical, plumbing, mechanical, and health and safety codes, according to the suit. 

Los Angeles says that by failing to properly maintain the foreclosed properties Deutsche Bank has engaged in unfair and fraudulent business practices in violation of the state Business and Professions Code. 

In addition, the city says the bank has violated the same law by illegally evicting people from their homes following foreclosure actions in order to sell the properties. 

Deutsche Bank has improperly forced people out of their homes through threats and by paying them small amounts of money, the complaint says. 

The city is asking the court to order Deutsche Bank to bring all the foreclosed homes into a habitable condition and to stop improper eviction practices. 

The suit seeks the imposition of civil monetary penalties against the bank for each violation of the law that is found by the court. 

People et al. v. Deutsche Bank National Trust Co. et al., No. BC460878, complaint filed (Cal. Super. Ct., L.A. County May 4, 2011). 

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