Image: Carmen Trutanich, Eric Garcetti, Janice Hahn, Tom LaBonge
Nick Ut  /  AP
City Attorney Carmen Trutanich; front from left, City Council president Eric Garcetti; Councilwoman Janice Hahn; and Councilman Tom LaBonge display photos of neglected foreclosed homes during a news conference announcing a lawsuit Wednesday Mat 4, 2011 in Los Angeles. The City of Los Angeles is suing Deutsche Bank, claiming the lender has violated federal, state, and municipal laws by letting hundreds of foreclosed homes become rundown and illegally evicting tenants. (AP Photo/Nick Ut)
updated 5/4/2011 3:32:29 PM ET 2011-05-04T19:32:29

The city attorney sued Deutsche Bank on Wednesday, claiming the giant international lender illegally evicted tenants from foreclosed properties and left dozens of homes and apartments to rot, many in low-income neighborhoods.

The suit, filed in Los Angeles County Superior Court, accuses the bank of violating federal, state and city laws and seeks potentially hundreds of millions of dollars in reimbursements to the city and to evicted tenants.

The bank's subsidiaries, Deutsche Bank National Trust Co. and Deutsche Bank Trust Company Americas, are the city's largest slumlords, according to the lawsuit.

The city attorney's office contends the bank failed to act properly as trustee to more than 160 homes and other residences with owners who couldn't meet their loan obligations during and after the 2008 international financial meltdown.

"It's time to recognize that the fraud committed on Wall Street turns into blight on Main Street," City Attorney Carmen A. Trutanich said at a news conference.

He said the bank's subsidiaries acted as trustees for trusts composed of mortgage-backed securities involving at least 2,000 properties across the country.

The complaint focuses mainly on properties in low-income areas of the city, specifically South Los Angeles and the northeastern San Fernando Valley, but Trutanich said it could be amended to include more homes if further problems are found.

The suit says Deutsche Bank broke a number of public nuisance and other laws.

The bank allowed many homes and buildings to deteriorate into boarded-up, graffiti-scrawled, trash-strewn eyesores that have led to increased crime in neighborhoods and contributed to falling home prices, the city alleged.

The lawsuit also contended that Deutsche Bank acquired hundreds of foreclosed properties with tenants who were forced out through "threats, small cash payments and baseless eviction actions" that violated the city's rent stabilization ordinance and federal laws.

In a statement, Deutsche Bank said loan servicers, not the lender as trustee, are contractually responsible for maintenance of foreclosed properties and any actions taken against tenants.

"For over a year, we have offered to help the Los Angeles city attorney's office contact the loan servicers that are responsible for maintaining the properties in question, but they have refused our help and would not even tell us which properties they were talking about," the bank said.

Trutanich maintained that Deutsche Bank, and not the loan servicers, are on the hook for maintenance and other costs on the lender's properties.

"They took control of the assets. That's their job," he said.

The city's complaint is unrelated to a lawsuit filed by the federal government on Tuesday against Deutsche Bank.

That lawsuit accuses the lender of mortgage fraud and seeks to recover hundreds of millions of dollars in insurance claims that the government has had to pay when homeowners defaulted on their mortgages.


Associated Press writer Robert Jablon contributed to this report.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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