WELL IT'S ABOUT &*%# TIME!!!
Today, the city of Los Angeles filed a lawsuit asking a judge to fine Deutsche Bank hundreds of millions of dollars and issue an injunction forcing the bank to clean up the more than 2,000 foreclosed properties it owns in Los Angeles.
The City Attorneys office states that Deutsche Bank is the largest slumlord in Los Angeles and that an extensive investigation has revealed that the bank and it's representatives (ie. servicers & listing agents) have not only let these properties turn into graffiti-scarred dens for squatters, gang members and other criminals but have basically destroyed the quality of life in hundreds of neighborhoods and driven up crime rates in the process.
Furthermore, city officials have discovered that Deutsche Bank and their reps have illegally evicted tenants and have terminated their utilities. If successful, the suit would be the first of its kind in the U.S. in which a city was able to collect penalties and restitution from banks for the havoc that their foreclosured properties have wrought on the city.
I am so glad to hear that something is finally being down about this matter. This is such a huge problem here in Los Angeles county as well as in Ventura county too. Frankly, I would like to see more city and county municipalities take similar action against all bank sellers and their representatives for their failure to maintain their REO properties to minimum building code standards.
I know that in a couple of my transactions, the county of Ventura got involved because they had put liens on the properties that my borrowers were buying for numerous bldg code violations. When a municipality does this, it creates a cloud on title and the property can't be transferred to a new owner until the liens are paid in full.
Good grief, some REO properties are flat-out health and safety hazards to even walk into. When walking into some properties, you are literally taking your life into your hands and I'm not referring to the crime rates of the neighborhood either. There are so many properties that have seriously dangerous health and safety issues that they are literally not safe walking into.
Don't even get me started on how some banks are flat out violating CA tenants rights. Yeah, I know, everyone hates having to deal with tenant occupied properties but the fact remains that here in CA, tenants have rights and a landlord must adhere to the laws in dealing with them. I have seen first hand from some of my own borrowers who decided to buy after being evicted by bank sellers. These were tenants who made their rent payments every month, on time (and had cancelled checks to prove it) but were thrown out with no regard to their lease contracts or deposits.
Anyway, I am so glad to see that Los Angeles is finally doing something about it. Hopefully, other cities will follow suit.
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Donne Knudsen
Realtor® - CalState Realty Services
DRE#: 01364050 / NMLS#: 249822
805.2069123
Serving low-medium income individuals and families as well as first time buyers with both their real estate as well as their mortgage needs including down payment assistance
Los Angeles County -- Ventura County
© 2010 - All Rights Reserved
This is a lawsuit to follow. How much money did they get in the bailout?
So Donne, tell us how you really feel about this:))) Be prepared all they will do is just reduce the price of the REO's in the pool to purchase and it will create havoc, do not expect them to fix it up....Lawsuit or not, by the time it goes thru the court system all these will be sold and the case will be dropped...anyway that is my 2cents for what it is worth
Donne,
I read in today's paper that Deutsche Bank was hit with a lawsuit because one of their subsidies, MortgageIT, pushed through FHA loans that should not have been closed. This was in today's Newsday if you care to read it.
They aren't alone. Happens locally with multiple banks.
Cindy - I'm sure this will not be the last that we hear of the Deutsche Bank lawsuits. On that, I would be sure of.
Endre - Well, my friend, I'm going to politely disagree with you on that. I believe this will be a wake-up call to Deutsche Bank as well as to several other banks who, I'm sure, will be watching the Deutsche Bank debaucle very closely. For the record: this lawsuit comes one day after the federal govt filed a billion dollar lawsuit against Deutsche Bank for mortgage fraud.
Bob - The LA Times article made reference to that lawsuit too. I'll have to check it out to see the details of that one.
Tammy - I too have seen other municipalities taking action against some banks for the condition of their REO properties.
Thx for stopping by folks; I really appreciate it. Have a good night too. :)
Donne, you are right. And, I thought the title said it all. It is about time someone makes these ^%#$@ accountable for the &%^ they put homeowners through. The frustration is enormous, and it needs to be addresed. I will definitely be following this.
BTW - I am trying to play catch up for all the posts I should have but never did get to.
It's just sad that banks can't do the right think when they own foreclosed homes and maintain them properly. In the case of HOA neighborhoods, banks will ignore all fines and penalties issues by an HOA and pay some ridiculous lump sum at closing, as opposed to keeping the properties maintained. Cities would be wise to take banks to task for this.
Banks run off tenants of investment properties, then delay the foreclosure for a year. That leaves the landlord no money for maintenance and repairs, especially after the vandals make their move.
If nothing else, maybe this will scare other banks into doing something right for a change. Suggested!
Donne - I loved this and I hope it IS the wakeup call that is needed! At this point local gov't can't continue to ignore these type of situations because it is just another component on what is bringing home values down so rapidly, creating more short sale situations in the process.
Who knows how many people could've still been "up" instead of upside down in values if the neighborhoods and homes had been maintained during the foreclousre and sitting processes. There's only so much Neighborhood Watch can do!
Don - LOL It's tough some weeks to stay on top of our blogging efforts. I know some weeks I struggle with it. Anyway, I don't know what you're market is like but our market here is saturated with run-down, dilapidated, dumpy REO's and it's actually getting worse. The worse part about this is that while it increases our overall inventory levels, it actually decreases available properties for financed buyers because these REO's are simply not eligible for financing.
Steve - I agree that city and county agencies need to be more cognizant of these issues and be responsive to the complaints they get on these properties - and they are getting complaints. I recently read a story in the LA Times about an HOA meeting getting ambushed by angry residents for the condition of quite a few REO properties in their neighborhood.
Dave - Good grief! Don't even get me started on what these bank owners are doing to the tenants of their properties. That would be a whole other post. I have seen so many of my borrowers finally decide to buy simply because of what some bank owner did to them. It's atrocious and despicable and needs to be addressed.
Alison - That's what I'm thinking too. Rest assured, there will be some very concerned bank owners and servicers watching the progress of this lawsuit very carefully. If the city of Los Angeles wins, the floodgates will open up on suing other bank owners.
Thx for stopping by everyone; I really appreciate it. Have a good day too. :)
Andi - It's so true that run-down, dilapidated, dumpy REO's are bringing blight to neighborhoods. As I've mentioned above, city and county agencies need to be more responsive to homeowner complaints about these properties too. When local agencies start fighting back, the banks will have no other option but to at least clean-up these properties. Personally, just cleaning up these properties would likely result in faster sales thus getting new homeowners into these properties and ultimately improving the neighborhood.
Thx for stopping by Andi; I really appreciate it. Have a good day too. :)
Hopefully the City of New Haven will be next. In addition to being eyesores like you mentioned, they make a haven for illegal activities
Donne - Very interesting news here.... We too hope this will be a wakeup call to other banks to get their ^5$%#@ together sooner rather than later.... We'll be watching this...
nice to see the system working for the people
Donne, this is an excellent article. You missed your calling as a consumer journalist!
Brian L. Sirota, Esq., Broker/Attorney, Bristar Realty, Orange County, California
Hi Donne - "Hopefully, other cities will follow suit." Nice pun to end your post!
Donne, this is good news. Perhaps that means that banks are going to be more willing to let go of some of those REO properties. If it's even more costly to keep them, they may allow the properties to be purchased.
Yes, some are health hazards, and certainly a blight on the neighborhoods.
Excellent news. The banks have gotten away with too much in this housing downturn.
Hi Donne, congrats on the feature! This is certainly long overdue. I read somewhere(not L A Times and unsure where) that Deutsche claiming they were never warned and so this comes from out of the blue....hmm, yeah right. Maybe that's Dodger Blue and Deutsche are in cahoots with the McCourts.
Maybe this will spinoff into different cities. There are other cities in the same boat as LA is.
Too bad they can't force that idiot Dodger owner to give up his rights of ownership...
If it's happening in LA, Phoenix AZ is next in line. We are one of the top 3 hardest hit cities with an overabundance of neglected distressed properties. Thanks for the citizen awareness vociferation!
Well, this sounds like an awful problem to endure for you. In our area, for the most part, the REO properties are kept up.
Donne, I have not heard or seen this type of thing going on here in Connecticut, but if was discovered that a Lender was doing this, I would hope that similar action would be taken.
Matthew - So many of the ones here are absolute dregs. They're the major eyesores of the neighborhood. Sorry to hear that you're having the same issues in your hometown.
Lisa & Robert - Hopefully, other banks will start to take notice that homeowners as well as citys won't put up with this anymore.
Matthew - Hopefully, this will work and the banks will clean-up their dumps.
Brian - LOL Thx for the compliment, I just get a little riled about the crap that so many of the banks get away with.
John - I truly believe that if Los Angeles wins their suit then other cities will probably do the same in order to get banks to clean-up the REO's in their cities.
Thx for stopping by folks; I really appreciate it. Have a good night everyone. :)
Cindy - What I'm seeing is that a lot of these properties are on the market but they're such dumps that no one wants to buy them, even lowball cash investors don't want to buy them.
Joe - They sure have and it's time they started paying for some of the crap that they caused.
Wallace - Interesting theory! I was talking about this earlier with an associate and we think that in addition to the money, LA actually wants to get their hands on the properties (perhaps as part of the settlement) and then turn them over to their NSP dept to rehab them so that they (LA) can sell them to low-medium income buyers through their LIPA program.
This way, the properties become part of the city's affordable housing program and they get the taxes as well as repayment on the loans if they're sold. We have no basis for this theory, just something we were talking about.
Michael - LOL I don't believe for one second that the bank didn't know about this. According to the LA Times, there has been a year long investigation where code violations were issued to the bank and their reps (servicers & listing agents). So there is no way in #%!! that they didn't know. Interesting theory though. :)
Robert - I wish cities and counties would start fighting back because if they did, perhaps more banks would take notice and start cleaning up these dumps.
Thx for stopping by everyone; I really appreciate it. Have a good night too. :)
Cory - LOL Wishful thinking???
Barb - Hopefully, Phoenix will take notice and do the same. I hope all cities would do this. If more cities fought back and refused to allow the banks to get away with this crap, the less of these dumps we would see and the more properties that would be eligible for financed buyers to buy. You see, the biggest problem with these properties is that they're not eligible for financing.
Aaron - That's good to hear that some other areas are not having this problem but from some of the commenters here, this is a common problem across the country.
George - According to the LA Times, there was a pretty extensive investigation into this problem and the bank has been forewarned and this is something that they have just refused to address.
Thx for stopping by everyone; I really appreciate it. Have a good night too. :)
Donne:
I hope LA's suit is successful. The bank has so much money behind it. The bank can drag the suit out forever.
I read about this in the Wall Street Journal and I totally agree with you, it's about damn time. Someone had to smack the banks around a bit so they understand that there are repercussions to foreclosure in the form of blight and lost value. This should send a message to all the others to get their acts together.
We are close to dead last in the nation for foreclosures so we are lucky here in South Dakota. I just can't imagine blocks among blocks of vacant property all trashed. I suppose there is mold, and vermin, and icky green pools too. Not to mention these squatters that might be there when you walk in and show these properties. Gives me the hebbie jebbies just thinking about it....be careful!
Hi Donne, thanks for sharing. let's hope that this gets the ball rolling...
Donne - GREAT BLOG! I love it. Calling the banks to account. They created this mess and they should have to clean some of it up. They kill me wanting to sell some of these homes at tip top prices without any repairs.
You are 100% right and I've been saying this for years there are health and safety issues here that should be addressed.
I wonder what happened. . the bank slept at the wheel and did not fund their lobbyist?
Donne,
Glad to learn about this. My crystal ball, however, predicts YEARS of legal wrangling with the suit.
Donne, this is good news. Hope it works out in the end for the people of LA.
Bryan - I sure hope that this stirs up the other banks and gets them to start cleaning up their properties too.
Ronald - Hopefully, it starts something.
Fernando - Who knows why they let it get this far or this bad. It's not like they haven't been notified or warned. This battle (of trying to get them to do something about their properties) has been going on for a couple of years now.
Michael - I hope it works too. So many neighborhoods here could use the help.
Thx for stopping by guys; I really appreciate it. Have a good night and a great weekend guys. :)
Evelyn - It's true that this could drag on but that would just seem rather pointless when they could just clean them up and sell them. Gee, let me see, what would cost more? To drag on a lawsuit for years or just clean the properties up and sell them? Hmmm.....
Rosalie - Some areas are really bad here. These properties are just making it worse. It doesn't have to be like this either.
Tni - Around here, so many of these properties are pretty much selling dirt cheap. The ones that the city is referring to are ones that even the lowball cash investors don't want and wouldn't pay anything for. So you know they have to be pretty bad. Don't even get me started on some of the health and safety hazards that so many of these properties have. That would be a whole other post.
Irene - I could see where it would be easy to say that the bank would try and drag this out but it just doesn't make sense to. Spend a lot of money dragging it out or spend a lot less cleaning and fixing them up and selling them. Hmmm.....which one seems less expensive?
Thx for stopping by ladies; I really appreciate it. I hope you all have a good night and a wonderful weekend too. If you're moms too then have a Happy Mother's Day too.