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Germany's largest bank has been hit with its second lawsuit of the week related to the company's U.S. mortgage business.
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The city of Los Angeles has filed a ""civil law enforcement action"":http://www.atty.lacity.org/OUR_OFFICE/Opinions_and_Recent_Filings/index.htm against ""Deutsche Bank"":http://www.db.com for allowing properties it has foreclosed on to fall into ""serious disrepair"" and for the alleged illegal eviction of hundreds of low-income tenants renting the foreclosed homes.
L.A. City Attorney Carmen Trutanich says Deutshce Bank ""has become one of the largest slumlords"" in Los Angeles.
The lawsuit focuses on 166 properties as examples of what Trutanich describes as Deutsche Bank's ""illegal conduct."" The complaint alleges violations of federal, state, and municipal laws regulating housing conditions, nuisance properties, and tenancies by Deutsche Bank, through its subsidiaries Deutsche Bank National Trust Company and Deutsche Bank Trust Company Americas.
The lawsuit seeks an immediate injunction, including a complete inventory, registration, and inspection of the bank's foreclosed properties; actions to bring the properties
[COLUMN_BREAK]into compliance with state and municipal codes; and a stop to all illegal evictions of rent-paying tenants.
The city attorney is also seeking restitution to current and former tenants; reimbursement to the city for costs of repair, abatement, inspection, and investigation; and penalties.
According to a statement from the city attorney's office, Deutsche Bank's liability is potentially in the hundreds of millions of dollars.
The city says over the past four years, Deutsche Bank's subsidiaries acquired over 2,200 Los Angeles properties through foreclosure. According to the complaint, the bank failed to properly maintain vacant homes, unlawfully evicted the tenants when the properties were occupied, and failed to provide minimum maintenance at occupied buildings ""condemning tenants to live in substandard and dangerous conditions.""
Deutsche Bank's New York office did not immediately return our request for comment, but John Emshwiller of the _Wall Street Journal_ says the bank claims the mortgage servicers that acted as trustees of the loans on the foreclosed properties are contractually responsible for maintenance and tenant issues, not Deutsche Bank.
The U.S. government sued Deutsche Bank ""earlier this week"":http://dsnews.comarticles/united-states-sues-deutsche-bank-for-1b-over-defaulted-mortgages-2011-05-03 for what it described as ""reckless"" behavior relating to its participation in a Federal Housing Administration (FHA) program.
The federal complaint alleges the bank put loans into the FHA program without following proper procedure to assess borrowers' ability to repay them, leading to high volumes of default claims. The U.S. is seeking damages and penalties of $1 billion.
