City of San Bernardino might join 'slumlord' lawsuit against Deutsche Bank

Last week's Los Angeles lawsuit alleging Deutsche Bank is one of the city's largest "slumlords" could touch off similar suits from other cities grappling with blighted homes, legal and housing experts said.


San Bernardino is in the process of reviewing the L.A. complaint to determine whether to join the lawsuit, said San Bernardino City Attorney Jim Penman. He said he plans to discuss the city's involvement in the lawsuit at Monday's City Council meeting during closed session.

The L.A. City Attorney's Office filed a lawsuit on May 4 accusing Deutsche Bank of allowing at least 166 foreclosed homes in Los Angeles to fall into disrepair, in violation of federal, state and city laws. In the complaint, the city attorney also alleges the lender illegally evicted hundreds of low-income tenants.

Frankfurt, Germany-based Deutsche Bank has countered that the city has filed suit against the wrong party. The loan servicers, not Deutsche Bank as trustee, are responsible for property maintenance and any actions involving tenants, a bank spokesman said.

The lawsuit highlights the difficulty of pinpointing a party that is responsible for the upkeep of foreclosed homes, many which deteriorate into eyesores that bring down property values in city neighborhoods.

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In San Bernardino, the German lender has paid $242,610 in administrative civil penalties on blighted homes, Penman said. The city began enacting the penalties, up to $1,000 per day on a home that does not meet city standards, in 2008.

Deutsche Bank owes the city $478,810 in pending administrative civil penalties, Penman said. He said the lender has complied for the most part with penalties.

Civil fines and lawsuits against lenders are the main means through which cities have sought remedies to foreclosed homes that have been left to rot, said Kevin Stein, associate director of the San Francisco-based California Reinvestment Coalition, which advocates for low-income communities in banking matters.

The Los Angeles lawsuit shines a spotlight on two growing problems in the housing industry - the failure to maintain properties and ensure tenant protection, Stein said.

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