City's Lawsuit Calls US Bank One of LA's Largest Slumlords, Asks for End to "Neglect" at Foreclosed Properties

The city attorney is seeking to hold US Bank accountable for blight at foreclosed homes it owns

By Melissa Pamer
|  Wednesday, Jul 18, 2012  |  Updated 5:53 AM CDT
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Los Angeles City Attorney Carmen Trutanich filed a lawsuit against US Bank on Monday, July 16, accusing the lender of being a slumlord that illegally evicts homeowners and then neglects the abandoned properties. Stephanie Elam reports from West Hills for the NBC4 News at 6 p.m. on July 17, 2012.

Stephanie Elam

Los Angeles City Attorney Carmen Trutanich filed a lawsuit against US Bank on Monday, July 16, accusing the lender of being a slumlord that illegally evicts homeowners and then neglects the abandoned properties. Stephanie Elam reports from West Hills for the NBC4 News at 6 p.m. on July 17, 2012.

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The nation's fifth-largest bank has allowed more than 150 foreclosed homes in Los Angeles to fall into disrepair, making US Bank "one of the largest slumlords" in the city, according to a new lawsuit filed by City Attorney Carmen Trutanich.

The civil complaint, filed Monday in Los Angeles Superior Court, seeks to hold US Bank responsible for properties that Trutanich said have dangerously deteriorated from "willful neglect."

He termed the disrepair "bank blight," urging residents who see problems at bank-owned homes to email bankblight@lacity.org.

"These nuisance properties depress surrounding property values. They become magnets for crime. They create dangerous fire hazards and place an increased stress on city services that are already taxed," Trutanich said during a press conference Tuesday.

His lawsuit follows a similar action – filed last year against Deutsche Bank – that is ongoing. Trutanich said that initial lawsuit was meant as a warning that had gone unheeded by US Bank.

The new lawsuit, he said, is also meant as a "deterrent" for other banks.

"As I said when we filed Deustche Bank, the fraud committed on Wall Street turns into the blight on Main Street," Trutanich said. "The neighborhoods of the Los Angles will not be held hostage by the balance sheets of large financial institutions."

The complaint alleges that US Bank has through foreclosure taken title to more than 1,500 homes in the city since 2008, unlawfully evicting hundreds of tenants. The lawsuit says US Bank allegedly used "unfair and deceptive practices" and violated state and federal laws.

The lawsuit names 158 examples of properties owned by US Bank where "unlawful conditions" exist. The homes are primarily in South Los Angeles and the northeast San Fernando Valley, a press release from the Trutanich's office states.

The complaint included pictures of home interiors covered in graffiti, outdoor pools filled with stagnant water, along with other alleged blighted, dangerous or unsanitary conditions.

The suit seeks a judge's order that the properties be brought up to city code within 30 days, and that allegedly illegal evictions stop, Trutanich said.

US Bank Vice President Thomas Joyce responded to the lawsuit in a statement that its loan servicers – the companies to which homeowners write their mortgage checks – are responsible for the state of the properties.

Joyce said US Bank, which is the flagship tenant of Los Angeles' tallest building, was "extremely disappointed" that the suit was filed.

"The city attorney has chosen the wrong party – we are not the owners of the properties, nor are we responsible for the servicing of the properties," Joyce said. "Our role as trustee is purely administrative."

Joyce said the Minneapolis-based company had requested information on properties in disrepair "in order to immediately identify and work with the responsible servicer to address outstanding issues."

The City Attorney's Office had "until very recently" refused to provide that information, Joyce said.

Asked about Joyce's statement at his Tuesday press conference on the steps of City Hall, Trutanich joked that maybe the city should sue "the pool guy" too.

"When you own a piece of property, you're at the top of the food chain. You can try to deflect and say somebody else is responsible, but at the end of the day, you're the owner," Trutanich said.

The lawsuit seeks: $2,500 for each property for each day a home was in violation of city code; restitution for those harmed by US Bank's alleged illegal business practices; a penalty of $2,500 for each related violation; plus an additional $2,500 for each violation that affected a senior citizen or disabled person.

US Bank could owe hundreds of millions of dollars if a judge sides with the city.

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