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LA prosecutor calls US Bank a slumlord in lawsuit due to condition of foreclosures

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POSTED July 17, 2012 7:17 p.m.


LOS ANGELES (AP) — The Los Angeles city attorney's office has renewed its call to blame mortgage lenders for urban blight sparked by the collapsed housing market, saying in a lawsuit that US Bank is a slumlord that illegally evicted homeowners and then neglected the abandoned properties.

The suit filed Monday marks the second time in just over a year that prosecutors have brought such a claim, mirroring a similar complaint against Deutsche Bank.

The city attorney's office contends the lenders destroyed neighborhoods by wrongly kicking people out of homes and leaving hundreds of properties to become trash-strewn crime magnets. City officials say banks that helped fuel a housing boom by dealing in securities backed by risky loans should be responsible for the blight caused by foreclosures that came when the market soured.

"The fraud committed on Wall Street, turns into blight on Main Street," City Attorney Carmen A. Trutanich said Tuesday.

US Bank and Deutsche Bank officials have both said that they are not responsible for the decline, arguing that the properties are owned by trusts they have no control over and that loan servicers that collect payments and manage properties are responsible for their upkeep.

"The city attorney is alleging that we are somehow owners of these homes. We're not the owners," Lee Mitau, executive vice president and general counsel for US Bancorp, US Bank's Minneapolis-based parent, told The Associated Press.

He said the bank's only role is handling administrative details for the trusts, such as collecting and paying out money.

"We don't have the ability to force the loan servicers to maintain these properties," he added. "We don't even know when they are foreclosed on."

US Bank has repeatedly asked for information on properties considered in disrepair but "until very recently, the city has refused to provide us with that information," Tom Joyce, the company's senior vice president and spokesman, told the Los Angeles Times.

The city attorney's office said in the suit filed in Los Angeles County Superior Court that US Bank National Association "has become one of the largest slumlords in the city of Los Angeles."

Prosecutors called Deutsche Bank the city's largest slumlord in a suit it filed in May 2011.

Both suits claim the banks violated federal, state and local laws.

Housing tenants "were intimidated and threatened with eviction, even deportation, in an effort by US Bank to clear the properties for resale," Trutanich said.

The complaint against US Bank contends there were problems with the lender's handling of 1,500 foreclosures, including about 170 homes that have fallen into disrepair.

The Deutsche Bank suit involved about 2,000 foreclosed homes.

The city attorney's office is calling for US Bank to stop what prosecutors consider illegal evictions. The suit also demands the lender immediately clean up foreclosed properties that have decayed in the wake of the 2008 housing market crash. It also seeks potentially millions of dollars in penalties and restitution.

The claim last year against Deutsche Bank said the world's fourth-largest bank acquired hundreds of properties from tenants who were forced out illegally.

More than 362,000 California homes were in foreclosure or their owners were seriously behind on their payments as of March 31, according to the Times.

In total, nearly a million California homes have gone into foreclosure in the past five years.


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