When lawyers for the city of Los Angeles took Deutsche Bank to court two years ago, they criticized the world's fourth-largest bank as among the city's worst slumlords and sought hundreds of millions of dollars in penalties and restitution.
But a settlement announced by city officials Friday delivered only $10 million — none of which will be paid directly by the bank. The bank does, however, have to ensure its foreclosed properties are properly maintained in the city, officials said.
That could be a transformative move because the bank foreclosed on more than 2,000 homes between 2007 and 2011 in areas including the San Fernando Valley, South Los Angeles and Northeast Los Angeles.
City lawyers had accused Deutsche Bank of letting hundreds of its properties fall into disrepair and breed crime. City officials also said that some tenants were illegally evicted, others lived in squalor, and many properties had become graffiti-scarred dens of squatters or criminals.
"This particular bank is … helping to destroy communities," City Councilman Dennis Zine said in 2011.
Deutsche Bank officials maintained from the outset that prosecutors were going after "the wrong party."
"As we have repeatedly advised the Los Angeles city attorney's office, loan servicers, and not Deutsche Bank as trustee, are contractually responsible for both the maintenance of foreclosed properties and any actions taken with respect to tenants of foreclosed properties," spokesman John Gallagher said in a statement in 2011.
Bank officials said in a statement Friday: "We are pleased that we could bring together the relevant parties to help facilitate a resolution.... The settlement will be paid by the servicers responsible for the Los Angeles properties at issue and by the securitization trusts that hold the properties."
In the settlement, Deutsche Bank did not admit "any liability or wrongdoing" and continues to dispute the city's claims, the statement read.
The bank, based in Frankfurt, Germany, agreed to require that its foreclosed properties be maintained properly.
In a news release, City Atty. Carmen Trutanich thanked Deutsche Bank "for working with this office to find a solution to a problem that has plagued this city for far too long."
"Hopefully, in the future, our financial institutions, homeowners, tenants and public agencies can cooperatively work together to better prevent or minimize the negative impacts economic downturns and foreclosures have on families and our communities," he said.
ari.bloomekatz@latimes.com
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