The city of Los Angeles has filed a civil lawsuit against U.S. Bank, claiming that the lender failed to maintain foreclosed properties, illegally evicted hundreds of renters and contributed to neighborhood blight.

The 97-page complaint, filed in the Los Angeles Superior Court on Monday, says that the Minneapolis bank disregarded "virtually every one of its legal duties" resulting in "an alarming number of vacant nuisance properties and substandard occupied housing units."

The L.A. City Attorney's Office conducted an 18-month investigation and is seeking potentially millions of dollars in penalties and reimbursement to the city for repairs, inspections and penalties.

The city says it repeatedly advised the bank over the past four years to fix the problem properties but that U.S. Bank "made no effort" to comply. The complaint included property addresses and photos of properties in disrepair.

Teri Charest, a U.S. Bank spokeswoman, says the city has sued the wrong party. Because the bank serves as the trustee for the securitizations holding the mortgages, it has no authority to foreclose on properties or evict tenants, she says.

"The only reason U.S. Bank's name is associated with these properties is because we serve as trustee for the trusts," Charest says. "Foreclosure actions are taken by the servicers on behalf of the trusts and merely in the name of the trustee."

U.S. Bank, a unit of U.S. Bancorp (USB), said in a statement Monday that it was "disappointed" in the city's action and noted that it had made multiple requests to obtain detailed information on the properties to identify and work with servicers to address the issues.

Throughout the mortgage crisis, trustees have said they are contractually limited to administrative duties and have suffered reputation risk because judges and some media outlets have routinely blame trustees for the actions of large mortgage servicers.

U.S. Bank claims each of the properties identified in the complaint are part of residential mortgage-backed securitizations where mortgages originated by other lenders were packaged into securities and sold to investors.

"Under the trusts' governing documents, other companies — not U.S. Bank — are responsible for the servicing of the loans, including maintenance of the properties and compliance with city ordinances," Charest says. "Because it is the servicers, not the trustee, who have the duty to maintain foreclosed properties, we intend to bring them into this lawsuit."

Last year, the city of Los Angeles sued Deutsche Bank for similar violations and claimed at the time that the German bank had become one of the city's largest slumlords. Deutsche Bank also claimed the city had sued the wrong party and that mortgage servicers were responsible for not repairing foreclosed homes.

"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," the bank said.

The Los Angeles civil suit alleges that various Deutsche Bank subsidiaries acquired more than 2,200 properties in Los Angeles through foreclosure and failed to make repairs to remedy nuisance violations.

The city claims it notified the bank of the substandard conditions of the buildings, but the bank either failed to respond or did not bring the properties into compliance. Most of the properties are in low-income areas in south Los Angeles or the northeast San Fernando Valley.

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