FRANKFURT (Reuters) - Deutsche Bank said it has settled a lawsuit with the U.S. city of Los Angeles that accused the bank of allowing hundreds of foreclosed properties to deteriorate into slum conditions and destabilize communities.
“The settlement will be paid by the (loan) servicers responsible for the Los Angeles properties at issue and by the securitization trusts that hold the properties,” the bank said in a statement late on Friday.
“Deutsche Bank is not contributing any funds toward the settlement,” it said, without disclosing any financial details.
“Deutsche Bank did not admit any liability or wrongdoing as part of the settlement, and continues to dispute the claims asserted by the City,” it added.
A statement from Los Angeles City said it has secured $10 million in civil penalties as part of settlement of the lawsuit it filed in May 2011.
During the housing boom and subsequent bust, Deutsche Bank subsidiaries acquired more than 2,000 properties in Los Angeles, according to the city’s 2011 civil enforcement action.
The city accused Deutsche of becoming one of its largest “slumlords,” allowing vacant properties to turn into nuisances, neglecting to maintain occupied properties, and illegally evicting low-income tenants to clear the way for a sale.
Los Angeles is one of many cities in the United States grappling with the problem of blighted properties after a wave of foreclosures that followed the housing bust.
It has passed a law requiring banks to fix the blighted homes they own, or pay a fine, but enforcing that has proven difficult.
In April this year a judge denied Deutsche Bank’s bid to dismiss the lawsuit, allowing Los Angeles to proceed with its case.
Reporting By Marilyn Gerlach; Editing by David Cowell