Germanyâ€™s largest bank has been hit with its second lawsuit of the week related to the companyâ€™s U.S. mortgage business.Â
The city of Los Angeles has filed aÂ civil law enforcement actionagainstÂ Deutsche BankÂ for allowing properties it has foreclosed on to fall into â€œserious disrepairâ€ 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 â€œhas become one of the largest slumlordsâ€ in Los Angeles.
The lawsuit focuses on 166 properties as examples of what Trutanich describes as Deutsche Bankâ€™s â€œillegal conduct.â€ 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 bankâ€™s foreclosed properties; actions to bring the properties
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 attorneyâ€™s office, Deutsche Bankâ€™s liability is potentially in the hundreds of millions of dollars.
The city says over the past four years, Deutsche Bankâ€™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 â€œcondemning tenants to live in substandard and dangerous conditions.â€
Deutsche Bankâ€™s New York office did not immediately return our request for comment, but John Emshwiller of theÂ Wall Street JournalÂ 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 BankÂ earlier this weekÂ for what it described as â€œrecklessâ€ behavior relating to its participation in a Federal Housing Administration (FHA) program.
The federal complaint alleges the bank put loans into theÂ FHAprogram without following proper procedure to assess borrowersâ€™ ability to repay them, leading to high volumes of default claims. The U.S. is seeking damages and penalties of $1 billion.