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Friday, February 10, 2012

Cincinnati Says Megabanks 'Systematically' Destroying City Property Values: Lawsuit Attacks Deutsche Bank and Wells Fargo

Megabanks Said Scamming City Housing Code 
 Special to The Daily Bellwether
 CINCINNATI (TDB) -- Frustrated in its efforts to rid older neighborhoods of crumbling eyesores, the City of Cincinnati has redeclared war on two of the world’s biggest banks.   The gist of the city's fight: The bankers are deliberately allowing some properties to deteriorate.  Like other Rust Belt cities, Cincinnati wants neighborhoods that are safe, clean and attractive. But with a recession, plunging home values and unrelenting foreclosures, many buildings in the city’s older wards are being vacated and titles are being taken by mortgage-holders. In quite a few of those cases, the homes are winding up in the laps of Deutsche Bank and Wells Fargo Bank.

Cincinnati's lawsuit against the two banking giants is a separate prong in ongoing legal battles over responsibility for the housing meltdown.  It is distinct from the nationwide settlement that has big banks putting up $25 billion for mortgage relief and restitution.  That deal was finalized yesterday.  The city first sued Deutsche and Wells Fargo in 2008 and, as a result of spot compromises, 22 run-down properties were brought into compliance with Cincinnati building codes. Others, though, were not, prompting the city to accuse the banks of selective compliance.  Says the lawsuit:  
  “Instead, Deutsche Bank and Wells Fargo engage in a cost-benefit analysis as to whether compliance with the relevant safety laws will produce an economic return and, in accordance with that analysis, their business practice is to spend money to comply with property maintenance laws only in neighborhoods and on properties for which they calculate an acceptable financial return on their ‘investment.’”
  The suit was filed last month in Hamilton County Common Pleas Court by city solicitor John P. Curp. The two banks have just switched it to federal court – the same ploy they used in 2008. [Ed. Note: Lawyers call the practice of moving cases "forum shopping" when it's done in an effort to find a more favorable jurisdiction.]   In this dispute, U.S. District Judge Sandra Beckwith shipped it back to Common Pleas Court in 2009. The city withdrew the suit last August with the intention of refining and refilling it.

  Now it’s back and turning up the heat on Deutsche Bank and Wells Fargo. It says they “consistently and systematically disregard the law,” owning vacant, blighted and unsafe properties that pose physical danger to police and firemen, provide havens for criminal activity, and destroy the safety and stability of many city neighborhoods. Often, city residents “bear the burden of abating and/or enduring the banks’ nuisance properties.”
  The city pointed to one Wells Fargo property at 1519 Republic St. in Over-the-Rhine as an example. Inspected this past Jan. 9, “The building is deteriorated and dilapidated, the roof leaks and is covered only with a blue plastic tarpaulin, the gutters are falling off, downspouts are missing and/or defective, the chimney is in need of tuck pointing and repair, the rear addition is structurally unsound, masonry is failing on the back wall, wood trim on the exterior lacks protective coating or paint, and windows are broken or missing.”  And similar language was used to describe a Deutsche Bank property at 3516 McHenry Av. in Westwood.

  City laws require the banks to maintain their properties even before taking title at foreclosure sales. The city’s lawsuit says the banks are out of compliance on the following:
  • -          81 properties owned by Deutsche Bank, and 54 owned by Wells Fargo, that have been ordered vacated or kept vacant because they are public safety hazards.
  • -          32 properties owned by Deutsche Bank, and 22 owned by Wells Fargo, that were cited for failure to properly secure and barricade.
  • -          Three properties owned by Deutsche Bank, and one owned by Wells Fargo, that were so deteriorated and unsafe that the city bore the $54,000 cost of demolition.
   The city has clearly lost its patience with the megabanks. It wants the court – whichever one gets the case – to order:
       -          Payment of the $54,000 in demolition costs
  • -          Payment of overdue Vacant Building Maintenance License fees of $174,000 from Deutsche Bank and $147,000 from Wells Fargo.
  • -          Payment of code violation fines of $34,000 from Deutsche Bank and $27,000 from Wells Fargo.
  • -          Payment for reinspection fees of $10,000 apiece.
  • -          Payment of cost to remove weeds and litter, $4,900 from Deutsche Bank and $6,100 from Wells Fargo.
  • -          The banks to immediately abate public nuisance properties.
  • -          That the banks own and are responsible for the maintenance of the properties in the lawsuit.
  • -          Payment of unspecified punitive damages.
  The city also works in this choice little dig: “Deutsche Bank and Wells Fargo regularly avail themselves of the Hamilton County Courts to prosecute civil actions, such as foreclosures, but consistently refuse to appear when summoned by the City of Cincinnati for the basic maintenance of abandoned and vacant properties they own.”  The banks have not yet filed an answer to the suit.

2 comments:

  1. Most of the major treatment facilities were built in the 1950s and contain over 16,000 total discrete assets that are critical to meeting MSD’s mission of protecting public health and the environment through water reclamation and watershed management.

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  2. Now it’s back and turning up the heat on Deutsche Bank and Wells Fargo. It says they “consistently and systematically disregard the law,” owning vacant, blighted and unsafe properties that pose physical danger to police and firemen, provide havens for criminal activity, and destroy the safety and stability of many city neighborhoods. Often, city residents “bear the burden of abating and/or enduring the banks’ nuisance properties.”

    ReplyDelete