U.S. Bank to pay $13.5 million to settle city lawsuit over foreclosed homes

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The Los Angeles City Attorney’s Office announced Thursday a lawsuit settlement with U.S. Bank over allegations the banking giant neglected its foreclosed properties in L.A. following the 2007-2008 housing collapse, bringing blight and squalor to some low-income neighborhoods.

U.S. Bank will pay a total of $13.5 million to the city and Los Angeles County to end the lawsuit. The bank will also designate a staffer to respond to code violations at its foreclosed properties in L.A., according to City Attorney Mike Feuer’s office.

“Our office is going to do what it takes to hold banks accountable,” Feuer said at a press conference Thursday.

The settlement is subject to court approval.

Originally filed by then-City Attorney Carmen Trutanich in 2012, the lawsuit called U.S. Bank a “slumlord” that neglected at least 170 properties following the 2007-2008 housing crash. Many of those homes were in the San Fernando Valley and in South LA.

However, officials for U.S. Bank argued at the time that Trutanich’s lawsuit targeted the wrong entity because the bank was merely acting as a “trustee” of the pool of loans related to the properties, rather than the “servicer” or company directly managing the loan.

In a statement on the settlement Thursday, the bank said, “In our capacity as Trustee, we will continue to facilitate ongoing coordination with the Servicers of the Trust properties to comply with the terms of the settlement agreement. We are committed to the strength and vitality of the communities where we serve and live. This commitment extends to the care and upkeep of neighborhoods impacted by foreclosures.”

Of the $13.5 settlement, about $1.6 money will go into the city’s general fund, which pays for basic city services, Feuer said. He hopes budget officials use the money to hire additional building inspectors to track foreclosed properties, he said.

A similar city lawsuit against Deutsche Bank over foreclosed properties was settled in 2013 for $10 million.

Both lawsuits came amid widespread complaints that banks were foreclosing on properties following the housing crash, but failing to ensure that the empty residences were kept free of graffiti, squatters and crime.



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