Deutsche Bank Is Sued Over Vacant Homes

Frustrated with the impact of vacant homes on a Cincinnati neighborhood, a nonprofit group has sued a unit of Deutsche Bank AG and other financial institutions, alleging that they have failed to maintain foreclosed properties properly.

The lawsuit, filed Thursday in state court in Hamilton County, Ohio, alleges that Deutsche Bank National Trust "has allowed its properties to deteriorate and become blights in the neighborhood."

The suit was filed by the Price Hill Will, a nonprofit community-development organization that owns properties in the neighborhood. It seeks damages and a court order that would compel the defendants to bring the properties up to code.

The lawsuit highlights the complexity of identifying who owns and is responsible for maintaining vacant and foreclosed properties when most mortgages made during the housing boom were packaged into securities and sold to investors.

The lawsuit alleges that Deutsche Bank National Trust was "one of the main foreclosing lenders" in Cincinnati's Price Hill neighborhood in 2007. But Deutsche Bank pointed out in a statement that as a trustee for mortgage securitizations, its role is largely administrative. In that role, the company "is not responsible for foreclosures or selling foreclosed property," it said. "Such decisions are made exclusively by the servicing companies."

Deutsche Bank declined to comment on the specifics of the lawsuit. The lawsuit states that the company told Price Hill Will that Wells Fargo Home Mortgage was the servicer for one of the homes involved and Citi Residential Lending was responsible for another.

A Citigroup Inc. spokesman declined to comment on the suit. But in a statement, the company said that when it forecloses on a property, it assumes responsibility to resolve "any existing or future housing-code violations."

Wells Fargo & Co. didn't respond to the suit but said the company is "proud of our practices."

When mortgages are packaged into securities, a trustee's role is to oversee the disbursement of borrowers' loan payments to the holders of the securities. Servicers are responsible for collecting loan payments, contacting delinquent borrowers and supervising foreclosures.

To view the online WSJ article, please click here.

Price Hill residents sue bank

Housing foreclosures a blight, group charges

Price Hill group sued an international bank Thursday, saying it forecloses on houses whose owners have defaulted but is refusing to clean up the now-empty properties, hurting area property values.

Price Hill Will, which buys and rehabs houses to attract more homeowners to the neighborhood, filed suit in Hamilton County Common Pleas Court against Deutsche Bank National Trust Co. and others.

"These homes are not being maintained by the banks after they foreclose on them," said Ken Smith, executive director of Price Hill Will. His group is a nonprofit economic and community development agency.

The suit accuses Deutsche Bank National Trust of ignoring Cincinnati orders to cut grass and weeds and to maintain the properties.

A Deutsche Bank spokesman said only that the company doesn't own the properties. Instead, it acts as a trustee for investors who buy the properties. Critics say that stance allows Deutsche Bank to avoid responsibility.

Hamilton County Auditor's Office records show Deutsche Bank National Trust is the owner of record for the three properties listed in the suit.

Price Hill Will says the bank owned no properties in Hamilton County a few years ago but now is the second-largest property owner in Price Hill, behind only the federal government.

Last year, Price Hill had 300 home foreclosures, the most in Cincinnati.

The suit alleges that the bank has foreclosed on the properties but has ignored requests - and orders from Cincinnati's health, housing and other departments - to clean up and repair the vacant properties that have become magnets for litter and crime, driving property values down for neighbors who take care of their homes.

"They won't mow the grass. They won't board it up. They won't protect it from vagrants or vandalism," Smith said.

That drives away potential buyers for any home in that area, the suit alleges.

"It's not something that's attractive to others looking to move there," Stephanie Moes, an attorney for the Legal Aid Society of Southwest Ohio, said.

The suit seeks to force Deutsche Bank to clean up and repair the properties, and pay for attorney, court and other costs.

To view the online Cincinatti Enquirer article, please click here.

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