Posted Jul 17, 2012 06:20 pm CDT
In a big-bucks lawsuit that blames U.S. Bank NA for the condition of some of the approximately 1,500 foreclosed homes to which it holds title as trustee, the city of Los Angeles seeks to hold the lender responsible for what it alleges are substandard conditions in many of the bank’s vacant and occupied residential properties.
The Los Angeles Superior Court suit, which was filed Monday against U.S. Bancorp, claims that the bank, as owner of the properties, plays a significant role in creating blighted conditions that cause a public nuisance and are conducive to crime. It also alleges that the bank has been involved hundreds of illegal evictions, according to the Los Angeles Times and Reuters.
The Associated Press also has a story.
Among other relief, the suit seeks to impose a $2,500-per-day fine, per violation, calling the bank “one of the largest slumlords in the city.” Potential liability could add up to “hundreds of millions of dollars,” it claims.
The bank has “disregarded virtually every one of its legal duties and responsibilities as owner, resulting in the creation and maintenance of an alarming number of vacant nuisance properties and substandard occupied housing units,” the suit contends.
It follows an 18-month investigation by the city, which previously filed a similar action against Deutsche Bank that is still ongoing.
However, the bank points the finger at the city and its loan servicers responsible for accepting payments on mortgaged homes, the two articles report. U.S. Bank has not, until recently, been provided with specific information by the city about what is amiss and contends that servicers are, as senior vice president Tom Joyce said in a written statement, “responsible for the upkeep of homes and properties and for interacting with homeowners and/or tenants.”
Explaining that U.S. Bank is also “troubled by properties that are not maintained, which have a corrosive impact on neighborhoods and communities,” he also said that the bank intends to bring the loan servicers into the city’s suit.
U.S. Bank is trustee for mortgage-backed securities trusts that actually own residential home loans, the Reuters article notes.