US Bancorp has been sued by Los Angeles in a lawsuit that claims the fifth-largest U.S. commercial bank is one of the city’s largest slumlords. The lawsuit also claims that the company has damaged the city’s appearance by allowing hundreds of foreclosed homes to fall into disrepair. The lawsuit was filed on Monday by Los Angeles City Attorney Carmen Trutanich. It claims that US Bank NA has acquired the title of over 1,500 foreclosed residential properties in the city as part of its role of trustee for multiple mortgage-backed securities trusts.
The city of Los Angeles said that since July of 2008, US 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.” The lawsuit also said that US Bank has ignored multiple demands that it follow the law, resulting in hundreds of homes to fall into uninhabitable condition or become ‘public nuisances.’ This in turn has resulted in hundreds of illegal evictions of tenants.
The city is asking for a civil fine of $2,500 per day for each violation by “one of the largest slumlords in the city.” The city also provided an estimate for potential liability in the “hundreds of millions of dollars.” A spokesman for US Bancorp, Thomas Joyce, said that the mortgage servicers are responsible for maintaining foreclosed properties and the trustee. Joyce also said that ‘we intent to bring them into the lawsuit.’ US Bancorp is based in Minnesota. Joyce said that the city just recently began detailing which homes need better upkeep and the bank will address foreclosure concerns in Los Angeles like it had done in other cities.
Los Angeles is not the only large city in the United States to sue regarding mortgage industry practices that reportedly have contributed to urban blight. The country’s largest mortgage lender, Wells Fargo & Co, settled a lawsuit in May with Memphis, Tennessee. The company settled another lawsuit on July 12 in Baltimore. The agreement with Baltimore was reached in connection with the company’s $175 million settlement with the federal government in regards to allegations that it overcharged Hispanic and black borrowers on mortgages. In February, there was a $25 billion settlement regarding foreclosure abuses and Wells Fargo was part of the settlement.
In April, the National Fair Housing Alliance filed discrimination complaints with the federal government against Wells Fargo and US Bancorp. The two banks were accused of maintaining foreclosed homes in white neighborhoods better than in minority neighborhoods. Los Angeles had 1.41 million housing units as of the 2010 census, with 95,000 of them vacant.