(LOS ANGELES) — “This case concerns defendant U.S. Bank National Association, a national bank that has become one of the largest slumlords in the City of Los Angeles,” begins a lawsuit brought by the L.A. city attorney’s office.
The complaint alleges that U.S. Bank, through foreclosures, has become since 2008 the owner of “thousands of residential properties” in L.A. “which it has completely failed to maintain.” The result, it says, is that hundreds of these homes have fallen into disrepair, “causing blight and destabilizing communities.”
A city press release says the bank’s potential liability is in the “hundreds of millions of dollars.”
Tom Joyce, director of corporate public relations for Minneapolis-based U.S. Bancorp (U.S. Bank), says in an email statement to ABC News that the bank, no less than the city attorney, is troubled that properties are not properly maintained and have a corrosive impact on neighborhoods.
He says, however, that the city attorney has chosen the wrong party to sue: U.S. Bank is not the owner of the properties, “nor are we responsible for the servicing” of them.
The homes, says the bank’s statement, are owned by trusts and by investors in those trusts. Only the companies to whom homeowners send their mortgage payments are responsible for the homes’ upkeep.
“It is clear from the complaint that the city does not understand our role,” the bank’s email says.
Frank Mateljan, spokesman for the city attorney’s office, says he understands U.S. Bank’s role just fine.
“They’re named on the deed,” Mateljan tells ABC News. “Much as the bank would like to blame gardeners and the pool man, it’s the bank’s responsibility to maintain these properties or to sell them to somebody who can.”
A press release from the city attorney’s office about the lawsuit says U.S. Bank was notified repeatedly about the substandard condition of the buildings, and that, despite this repeated notice, it failed to respond or to address the problem.
The bank says it entered into extensive discussions with the attorney’s staff, and that it made “multiple requests over the past couple of years to obtain detailed information” as to which properties were in disrepair. Only recently, it says, did the city provide it with the information.
Says Mateljan, “We find that funny and disturbing at the same time — a major bank asking, ‘Tell us what properties we own and which are in disrepair.’ If you’re the owner and named on the deed, you have the benefits of being owner and the burden of maintenance.”
L.A.’s suit, he says, is very similar to one the city brought last year against Deutsche Bank. These two actions “have lit a fire under both Deutsche Bank and U.S. Bank to get a better inventory of their properties, and do a better job keeping them up to code.” The Deutsche Bank case is pending.
Deutsche Bank’s position is that the city attorney “has sued the wrong party,” for reasons almost identical to those advanced by U.S. Bank.
Copyright 2012 ABC News Radio
Erin McClam, CNN
Julia Horowitz, CNN
Susan Scutti, CNN
Paul Menser, BizMojo Idaho