- Key Insight: As New York steps up its enforcement of rent regulation laws, banks are among the landlords facing punishment.
- Supporting Data: Deutsche Bank and U.S. Bank have agreed to pay penalties of $42,000 and $48,000, respectively, for alleged violations.
- Expert Quote: "We will not hesitate to take action against any bank that attempts to circumvent our rent stabilization laws." — New York State Attorney General Letitia James
New York is punishing landlords, including banks, for allegedly failing to comply with the state's complex rent laws.
This week, New York State Attorney General Letitia James announced settlements with Deutsche Bank and U.S. Bank over their alleged violations of rent stabilization rules. The two lenders were hit with a combined $90,000 in penalties.
"No matter how big or powerful they are, banks are not above the law, and they cannot get away with failing to protect their tenants," James said in a statement. Banks may become landlords when they, or the securitization trusts for which they act as trustees, foreclose on delinquent borrowers.
About one million New York City apartments — roughly 44% of all the city's rental properties — are rent stabilized. Under state law, any increase in rent for these apartments is strictly limited, and landlords must meet a high legal threshold to evict tenants.
In her statement, James said the settlements with the two banks are part of a broader enforcement program in connection with rent stabilization.
"My office created this compliance program to ensure all New York City tenants are treated fairly," James said. "We will not hesitate to take action against any bank that attempts to circumvent our rent stabilization laws."
Deutsche Bank did not respond Tuesday to American Banker's questions, and U.S. Bank declined to comment. Both banks neither confirmed nor denied the accusations, according to court filings.
Typically, the rules of rent stabilization apply to buildings with at least six apartments built before 1974, when the state's Emergency Tenant Protection Act was passed. But under one interpretation, embraced by the attorney general, the law also covers pre-1974 buildings that originally had no more than five apartments, if they were later altered to include six or more units.
According to James' office, the buildings owned by Deutsche Bank and U.S. Bank fell into this category.
In Deutsche Bank's case, the settlement involved 392 Rockaway Parkway, a Brooklyn building that the bank acquired through a foreclosure sale in October 2024. According to the attorney general, Deutsche Bank attempted to evict tenants from four apartments at the property, arguing that the units were not rent stabilized.
The attorney general's office begged to differ. Under James' reading of the law, the Rockaway Parkway apartments were "de facto" rent stabilized.
When James' office notified Deutsche Bank of its interpretation, Deutsche Bank dropped the evictions. But when, in August 2025, the attorney general's office set a deadline for the bank to comply with other aspects of the law, the bank allegedly never responded.
Under the new settlement, Deutsche Bank must pay $42,000 in penalties and register four units as rent stabilized.
Similarly, U.S. Bank obtained the title for a Brooklyn property, 8624 Glenwood, at a foreclosure sale in September 2023. Soon afterward, the bank attempted to evict tenants from the building.
A Brooklyn housing court judge dismissed those eviction proceedings in July 2025, and U.S. Bank gave up on them. But according to James' office, the bank did not register the apartments as rent stabilized.
Ultimately, the banking subsidiary of Minneapolis-based
In recent years, rent stabilization has become a hot-button political issue in New York City. During his victorious campaign for mayor, Zohran Mamdani
A number of banks have responded by
