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IT'S ABOUT &*%# TIME! City of Los Angeles Fines Largest Slumlord for Their Run-down, Dilapidated & Dumpy Properties

By
Mortgage and Lending with Los Angeles & Ventura Counties in CA

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. 

Posted by

 

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

 Donne Knudsen

Realtor® - CalState Realty Services

DRE#: 01364050 / NMLS#: 249822 

 

805.2069123

 

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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

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Wallace S. Gibson, CPM
Gibson Management Group, Ltd. - Charlottesville, VA
LandlordWhisperer
This is a double edged sword * LA has to go up against BIG BANK DEEP POCKET$ and 2,000+ residents will need assistance and housing.....I doubt the LA has them waiting - all shiny and new. I predict the properties will be razed like in Atlanta and Detriot, their buildings/improvements will go OFF the tax rolls and the taxpayers of LA will get a HEFTY chuck of the bill
May 05, 2011 10:15 AM
Michael Jacobs
Pasadena, CA
Pasadena And Southern California 818.516.4393

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.

May 05, 2011 11:10 AM
Robert L. Brown
www.mrbrownsellsgr.com - Grand Rapids, MI
Grand Rapids Real Estate Bellabay Realty, West Mic

Maybe this will spinoff into different cities. There are other cities in the same boat as LA is.

 

May 05, 2011 12:40 PM
Cory Barbee
San Diego, CA
Broker (760) 563-4022

Too bad they can't force that idiot Dodger owner to give up his rights of ownership...

May 05, 2011 12:52 PM
Barb Merrill
Cactus Mountain Properties, LLC - Tempe, AZ
GRI, Associate Broker

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!

May 05, 2011 01:24 PM
Aaron Vaughn 830-358-0455
Conifer Builders LLC - Canyon Lake, TX

Well, this sounds like an awful problem to endure for you. In our area, for the most part, the REO properties are kept up.

May 05, 2011 02:06 PM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

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.

May 05, 2011 02:49 PM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

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.  :)

 

May 05, 2011 03:04 PM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

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.  :)

May 05, 2011 03:26 PM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

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.  :)

May 05, 2011 03:36 PM
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA

Donne:

I hope LA's suit is successful.  The bank has so much money behind it.  The bank can drag the suit out forever. 

May 05, 2011 05:27 PM
Bryan Robertson
Los Altos, CA

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.

May 05, 2011 05:31 PM
Rosalie Evans
Meritus Group Real Estate - Sioux Falls, SD
The Evans Group, Sioux Falls, SD Homes For Sale

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!

May 05, 2011 06:24 PM
Ronald DiLalla
Century 21 Discovery DRE 01813824 - Anaheim, CA
No. Orange Cty Real Estate

Hi Donne, thanks for sharing.  let's hope that this gets the ball rolling...

May 05, 2011 07:40 PM
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

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.  

May 05, 2011 08:30 PM
Fernando Herboso - Associate Broker MD, & VA
Maxus Realty Group of Samson Properties - Clarksburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

I wonder what happened. . the bank slept at the wheel and did not fund their lobbyist?

May 05, 2011 11:29 PM
Irene Kennedy Realtor® in Northwestern NJ
Weichert - Lopatcong, NJ

Donne,

Glad to learn about this.  My crystal ball, however, predicts YEARS of legal wrangling with the suit.

May 06, 2011 02:04 AM
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Donne, this is good news. Hope it works out in the end for the people of LA.

May 06, 2011 02:28 AM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

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.  :)

May 06, 2011 02:48 PM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

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.

Mother's Day Vase

May 06, 2011 02:56 PM