Deutsche Bank is Losing its Fight with Los Angeles – They Will Have to Clean Up Foreclosed Properties

Deutsche Bank subsidiaries acquired the title to more than 2,000 properties in Los Angeles during the housing boom and subsequent fall. The city accused Deutsche of becoming one of its largest “slumlords” by allowing empty properties to turn into nuisances, neglecting to maintain properties with tenants living in them, and illegally evicting low-income tenants in order to pave the way for a potential sale.
In a significant ruling, a judge has denied Deutsche Bank AG’s bid to dismiss a lawsuit issued by the City of Los Angeles accusing Deutsche of letting hundreds of foreclosed properties fall into disrepair and illegally evicting low-income tenants.

Los Angeles Superior Court Judge Elihu Berle allowed the 2011 civil enforcement action to proceed, according to the city attorney’s office. A ruling was made during an April 8 hearing and a written decision was issued on Tuesday, the city said.

LA’s low-income areas are most affected, because the blighted properties have led to decreased property value, increased crime rates and added stress on city services.

“This ruling will now allow our action to move forward to trial and ultimately to holding the bank accountable for its intolerable practice or perpetuating blight,” city attorney Carmen Trutanich said.

Los Angeles is just one of many cities in the United States facing the issue of blighted properties after a wave of foreclosures that followed the housing bust. It has passed a law which requires banks to fix the shattered homes they own or pay a fine, but enforcing this law has been difficult.

Los Angeles is pursuing a court order which would compel the bank to bring foreclosed properties up to code and halt illegal evictions. In addition, the city is seeking monetary damages that could possibly reach hundreds of millions of dollars.

We believe a rising tide lifts all boats. Maintained properties are maintained neighborhoods. And that means they are easier to sell. What do you think? Should Deutshe Bank be required to clean up these properties?

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