Los Angeles Sues U.S. Bank, Calls It a 'Slumlord'

Before you go, we thought you'd like these...
Before you go close icon
By Jonathan Stempel

The city of Los Angeles has sued U.S. Bank, 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 U.S. Bank 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, U.S. 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 that 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 the bank's potential liability to be in the "hundreds of millions of dollars."

Thomas Joyce, a spokesman for Minneapolis-based U.S. Bank, 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 Cities' Lawsuits

Other large U.S. cities have also sued over mortgage industry practices that they allege contributed to urban blight.

Wells Fargo & Co, the nation's largest mortgage lender, in May settled a lawsuit by Memphis, Tenn., and on July 12 it settled a similar case involving Baltimore.

The Baltimore accord was reached in connection with the San Francisco-based bank's $175 million settlement with the federal government over allegations that it overcharged black and Hispanic borrowers on mortgages, contributing to higher foreclosures.

Wells Fargo was one of five big servicers to join February's $25 billion U.S. settlement over foreclosure abuses.

The National Fair Housing Alliance filed discrimination complaints with the federal government in April against both U.S. Bank and Wells Fargo, accusing them of doing a better job maintaining foreclosed homes in white neighborhoods than in minority neighborhoods.

According to the 2010 census, Los Angeles had 1.41 million housing units, of which about 95,000 were vacant. The city's population was about 3.79 million.

Shares of U.S. Bancorp were down 9 cents at $32.69 in morning trading on the New York Stock Exchange.

The case is People v. U.S. Bank NA et al, Superior Court of California, Los Angeles County, No. BC488436.

Copyright 2012 Thomson Reuters. Click for restrictions.

See also:
Middle Class May Be Richer Than It Thinks, Economist Says

90% of Bank-Owned Homes Held Off Market, Estimates Suggest
Underwater Mortgages Keeping Housing Market Afloat?

11 PHOTOS
Best Beach Towns for Buying Foreclosures
See Gallery
Los Angeles Sues U.S. Bank, Calls It a 'Slumlord'

Average sale price: $355,604
Average foreclosure discount: 28.17%

The quintessential California beach town, Santa Cruz is located about 75 miles south of San Francisco. It is comfortably situated between thickly wooded mountains and clean sandy beaches. The Santa Cruz boardwalk entertains children and adults alike: It has an amusement park complete with roller coaster, arcades, mini-golf, bowling, shopping and outdoor concerts.

See foreclosures for sale near Santa Cruz, Calif.

Average sale price: $237,405
Average foreclosure discount: 30.34%

The Town of Barnstable is comprised of several famous Cape Cod villages, including Hyannis. It's also close to the islands of Martha's Vineyard and Nantucket. Hyannis has a large natural harbor and is the largest recreational boating port on Cape Cod. The Kennedy Compound is also located in Barnstable, in the village of Hyannis Port.

See foreclosures for sale in Barnstable, Mass.

Average sale price: $345,799
Average foreclosure discount: 30.56%

Honolulu, Hawaii's capital located on the island of Oahu, offers top quality surfing, famous Waikiki Beach and pristine hiking trails. It also has an exemplary public transportation system, which connects its world class shops and restaurants to its relaxing beaches.

See foreclosures for sale near Honolulu.

Average sale price: $161,819
Average foreclosure discount: 30.38%

Since Las Vegas isn't on the beach, your best bet for being able to gamble and ride waves is Atlantic City, N.J. Besides its familiar street names (see: Monopoly), the city has a world famous boardwalk lined with casinos, shops, restaurants and an amusement park.

See foreclosures for sale in Atlantic City, N.J.

Average sale price: $202,454
Average foreclosure discount: 31.14%

Hilton Head Island is home to three championship golf courses, including the site of the Verizon Heritage PGA Tour Golf Tournament. It also features award-winning restaurants and shopping, as well as an array of outdoor recreational activities. Here you can enjoy scuba diving, water skiing, fishing charters, cruises and dolphin-watching.

See foreclosures for sale in Hilton Head Island, S.C.

Average sale price: $159,065
Average foreclosure discount: 34.42%

Charleston prides itself on its beach-side golf courses, one of which was home to the 2012 PGA Championship. The city also comes with a rich history of plantations and historic homes and buildings.

See foreclosures for sale in Charleston, S.C.

Average sale price: $274,077
Average foreclosure discount: 38.80%

After a long day enjoying the sunny beaches or hiking in majestic mountains, spend the night tasting some of the finest California wines in Santa Barbara's wine country. The city also has a temperate climate year-round, so it is a great place to live if you want to avoid snowy winters and scorching summers.

See foreclosures for sale near Santa Barbara, Calif.

Average sale price: $156,148
Average foreclosure discount: 40.43%

Marco Island has miles of white-sand beaches and beautiful year-round weather. Naples, just north of Marco Island, also offers white sand beaches and has world class golf courses and exciting outdoor activities. Naples is also close to Everglades National Park.

See foreclosures for sale in Naples, Fla.
See foreclosures for sale in Marco Island, Fla.

Average sale price: $78,851
Average foreclosure discount: 44.38%

Texas has beaches, too! Miles of the Gulf of Mexico shoreline extend across Corpus Christi, where there are plenty of sites and attractions. Visit the U.S.S. Lexington Museum or the Texas State Aquarium. For more outdoor adventures, check out Mustang Island State Park, where you can enjoy fishing, bonfires, kayaking and camping.

See foreclosures for sale in Corpus Christi, Texas.

Average sale price: $93,188
Average foreclosure discount: 45.11%

Another outdoorsy paradise, Vero Beach offers -- not surprisingly -- miles of beaches and is home to the Pelican Island National Wildlife Reserve. Enjoy airboat tours, scuba diving, snorkeling and many other water and beach sports.

See foreclosures for sale in Sebastian-Vero Beach, Fla.

of
SEE ALL
BACK TO SLIDE
SHOW CAPTION +
HIDE CAPTION

More on AOL Real Estate:
Find out how to
calculate mortgage payments.
Find
homes for sale in your area.
Find
foreclosures in your area.
Find homes for rent in your area.

Follow us on Twitter at @AOLRealEstate or connect with AOL Real Estate on Facebook.

Read Full Story

Find a New Home

Buy
Rent
Value
Powered by Zillow

From Our Partners