U.S. Bank has agreed to pay $13.5 million to settle a lawsuit by the city of Los Angeles alleging the bank failed to properly maintain hundreds of foreclosed properties, City Attorney Mike Feuer announced Thursday.
The settlement — which stems from a 2012 lawsuit filed by Feuer’s predecessor Carmen Trutanich — includes $11.9 million that will be split by city and county prosecutors to pursue consumer protection cases.
Feuer said he will recommend the remaining $1.6 million be used for building inspectors to address municipal code violations.
“Banks must be accountable for the condition of the properties they hold,” Feuer said. “This significant settlement underscores my commitment that all foreclosed and vacant properties be kept up to code, so they don’t become sources of blight or magnets for crime.”
U.S. Bank, which has not admitted to wrongdoing, also agreed to assign a high-ranked, full-time employee to work with the city on code violations at properties foreclosed by the bank, under the settlement terms.
In his original complaint, Trutanich targeted 170 properties foreclosed by U.S. Bank that he alleged had been poorly maintained, creating blight in the neighborhoods where they were located.
U.S. Bank spokesman Dana E. Ripley said that the company will work with loan servicers “and the city of Los Angeles to ensure foreclosed properties are maintained according to local ordinances.”
Ripley said that unlike loan servicers, who are “legally obligated and responsible to maintain foreclosed properties,” U.S. Bank is the trustee and not the owner for all but one of the 170 properties. The bank owns one of the foreclosed properties and “will pay its respective portion of the settlement for the one property at issue it owned.”
“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,” Ripley said.
“We are committed to the strength and vitality of the communities where we serve and live,” he said. “This commitment extends to the care and upkeep of neighborhoods impacted by foreclosures.”
–City News Service