Jonathan Stempel, Reuters via Huffington Post
Los Angeles has sued US Bancorp, accusing a unit of the fifth-largest U.S. commercial bank of becoming one of its biggest slumlords and blighting the city by allowing hundreds of foreclosed homes to fall into disrepair.
Monday’s civil lawsuit by the office of Los Angeles City Attorney Carmen Trutanich alleges that US Bank NA has taken title to more than 1,500 foreclosed residential properties in the city in its role as trustee for various mortgage-backed securities trusts.
Los Angeles said that at least since July 2008, US 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.”
It said the bank has ignored repeated demands that it comply with the law, causing hundreds of homes to become uninhabitable or “public nuisances,” and resulting in illegal evictions of hundreds of tenants from the second most-populous U.S. city.
Los Angeles said it is seeking a civil fine of $2,500 a day for each violation by what it called “one of the largest slumlords in the city.” It estimated potential liability in the “hundreds of millions of dollars.”
Thomas Joyce, a spokesman for Minneapolis-based US Bancorp, said it is the mortgage servicers, not the trustee, who have the responsibility to maintain foreclosed properties, and that “we intend to bring them into” the lawsuit.
Joyce also said the city only recently agreed to detail which homes needed better upkeep, and that the bank will “stand ready” to address property-specific and general foreclosure concerns as it has done in other cities.
Other large U.S. cities have also sued over mortgage industry practices that they allege contributed to urban blight.