The mega banks have been accused of neglecting foreclosed houses that is plaguing the city – these units having been converted into virtual trash dumps. The banks say that they are mere trustees of the investors – those who hold the mortgage backed securities. It is the loan servicers who are supposed to see to maintenance and other tasks.
Although the banks have contracts with the mortgage servicers it cannot press the servicers to properly maintain the assets on behalf of the investors argued the representatives of mega banks. US Bank said that it has notified its servicers regarding maintenance as per the law.
The loan servicers wiggle out of a loophole in the contract that eases their maintenance burden. Generally they are expected to spend dollars on upkeep if they think that the investment can be recovered explained lawyer Laurence Platt of Washington D.C. He has been representing the banks in lawsuits pertaining to foreclosures. He said, “Who pays for a pig in a poke? This is a collateral issue of the whole foreclosure crisis”.
Calls made to two of the mega servicers of the country, Ocwen Financial Services (West Palm Beach, Florida) and Statebridge Co. (Denver, Colorado) were not responded to. Litton Loan Servicing based in Houston also refused to answer any queries made by The Associated Press. Wall Street firms like Wells Fargo are owners of many servicers. Deputy City Attorney of Los Angeles, Julia Figueira-McDonough said that this passing the ball into the court of the mortgage servicers is akin to dodging responsibility because it is the banks that own the records and on top of that it is their fiduciary duty towards the beneficiaries of the trust.
City officials in Los Angeles and elsewhere said they were furious with the ping pong finger pointing between the banks and their cohorts while an epidemic of blight is ruining localities. Robert Triozzi the law-director of Cleveland City said, “We’re left holding the bag. Someone has got to be held accountable. Not only have these institutions caused this mess they have continued to perpetuate it”. Cleveland city had failed in suing Deutsche Bank over many issues related to foreclosures during the past three years.
The renters are a sorry lot. Silvia Lobato renting a one roomed apartment in South Los Angeles for the last 14 years only wants necessary repairs to be done. Los Angeles City has brought a suit against Deutsche Bank for neglecting 166 properties; the house where Lobato resides is one of them.