L.A. Sues Bancorp for Foreclosure Blight
L.A. Sues Bancorp for Foreclosure Blight
Los Angeles County is suing a unit of U.S. Bancorp, alleging the bank has allowed hundreds of foreclosed homes to deteriorate and blight the metro area. Officials with Los Angeles hope that the civil lawsuit will serve as a warning to other banks to keep up their foreclosures, too.
"It's a message to other banks: Step up and do the right thing," says Carmen Trutanich, Los Angeles city attorney.
In the lawsuit, Los Angeles calls U.S. Bancorp a "slumlord" and accuses the bank of disregarding "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" since July 2008. Many of the properties have become uninhabitable due to lack of maintenance, the lawsuit alleges.
Los Angeles is seeking a civil fine of $2,500 a day for each violation found in the city, estimated to be "hundreds of millions of dollars."
U.S. Bancorp officials claim the mortgage servicers are responsible for the upkeep of the foreclosed properties -- not the trustees. “We intend to bring them into [the lawsuit],” says Thomas Joyce, a spokesman for U.S. Bancorp. U.S. Bancorp says that it also is willing to immediately address any upkeep issues with homes that the city can provide details on that pose a concern.
Source: “Los Angeles Sues U.S. Bancorp, Calls Bank a Slumlord,” Reuters (July 17, 2012)
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