online.wsj.comJune 30, 2013
By Nicky Redl
The City of Los Angeles Attorney and Germany's Deutsche Bank AG (DB) Saturday said they have reached a settlement in a conflict over foreclosed properties in the city, with the bank saying it will not contribute any funds toward the settlement.
"As we have said from the outset, loan servicers are responsible for maintaining foreclosed properties. Deutsche Bank did not admit any liability or wrongdoing as part of the settlement, and continues to dispute the claims asserted by the city," Deutsche Bank said in a statement.
The Los Angeles City Attorney's Office Saturday said it has settled the civil law enforcement action filed against Deutsche Bank in May 2011 and secured $10 million in civil penalties.
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, Deutsche Bank said.
As part of the resolution, the servicers will continue to work with the city to maintain these properties and Deutsche Bank as trustee will continue to intermediate between the city and the servicers, the bank added.
The settlement is still subject to court approval.
The Los Angeles City Attorney had accused Deutsche Bank of not maintaining foreclosed properties, and estimated the liability of Deutsche Bank, as well as a U.S. bank it filed a similar case against, potentially in the hundreds of millions of dollars.
It said that Deutsche Bank as trustee for mortgage-backed securities trusts acquired title to thousands of residential properties in the city as a result of the financial crisis, and that hundreds of them were allowed to fall into disrepair after foreclosure.
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