Los Angeles sues US Bank for failing to maintain foreclosed properties

The City of Los Angeles is suing one of the largest banks in the country. The lawsuit, filed Monday, alleges that U.S. Bank has illegally evicted low-income tenants and has allowed hundreds of foreclosed properties in Los Angeles neighborhoods to deteriorate into slum-like conditions.

City Attorney Carmen Trutanich said he recently visited a foreclosed home U.S. Bank owned in a South Central neighborhood.

“There was trash strewn all over the property, front yard, backyard," Trutanich described. "The grass varied from six inches to two feet tall. Looking at the property, you knew it was vacant."

Trutanich said properties like that can depress the value of neighboring houses — and, in the long run, can lower the city’s tax revenues.

In response, U.S. Bank issued a statement that says loan servicers are responsible for the upkeep of foreclosed homes.

Trutanich disagrees.

“It’s their property," he said. "You can’t counteract away your responsibilities. Ownership of property carries burdens and benefits. The benefits are you own it, you get to get the increase in value, the burdens are you’ve got to keep it up.”

The City of Los Angeles' lawsuit could cost U.S. Bank hundreds of millions of dollars. It follows a similar suit the city filed last year against Deutsche Bank that’s still in litigation.

Trutanich said he hopes both lawsuits signal to banks across the country that they can’t hold neighborhoods hostage with what he calls “slumlord behavior.”

The City of Los Angeles has established a "bank blight" hotline and email account for people to report bank-owned foreclosed properties that need improvement. Those concerned can either call (213) 978-7141 or email bankblight@lacity.org.