*Deutsche Bank accused of being L.A. slumlord

This could be quite a story: The City Attorney's office filed suit this morning against the German banking giant, asking a judge to fine the company hundreds of millions of dollars and force it to clean up the 2,000 foreclosed properties it owns in L.A. From the LAT:

After a yearlong investigation, city officials claimed in court papers that Deutsche Bank has illegally evicted tenants, shut off their water and power and then let hundreds of properties turn into graffiti-scarred dens for squatters, gang members and other criminals, destroying quality of life and driving up crime in the process. They say the bank, which invested heavily in mortgage-backed securities, found itself "transformed ... from detached investment brokers ... to large-scale residential property owners, a role whose responsibilities ... they have completely eschewed."

From Bloomberg:

Renee Calabro, a spokeswoman for the Frankfurt-based bank, said the complaint filed by the Los Angeles City Attorney is "against the wrong party," according to an e-mailed statement. "Loan servicers, and not Deutsche Bank as trustee, are contractually responsible for both the maintenance of foreclosed properties and any actions taken with respect to tenants of foreclosed properties."

The feds filed suit on Tuesday, accusing the firm of recklessly approving mortgages "in blatant disregard" of whether borrowers could make the required monthly payments. The government is seeking more than $1 billion in that suit.

*Update: Some portions from the lawsuit:

Unlawfully vacated foreclosed properties were often not immediately sold, and defendants failed to maintain the buildings, as a result of which they became vacant nuisance properties. In violation of the Los Angeles Vacant Building Ordinance and California Public Nuisance Law, defendants failed to fence and board these properties, or take other necessary precautions to ensure the safety of the surrounding community. Defendants neglected all of their legal duties as the owners of these vacant properties, which resulted in the vacant properties quickly devolving into public nuisances.


The vacant and unsecured buildings defendants own attract vagrants, gang members and other criminals and constitute prime locations for such individuals to engage in illegal criminal activity. Defendants' vacant properties that are not properly secured are also vulnerable to arson, are a blight, cause deterioration and instability in neighborhoods, and pose serious threats to the health and safety of area residents.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
Mark Lacter, business writer and editor was 59
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