Foreclosure Plagued Cities Sue Banks for Blight

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May 12, 2011 ‐ By TheEditor

(Bloomberg) — Four major U.S. cities that pay for the upkeep of foreclosed properties are trying to recoup the costs of services including lawn mowing, repairs and security by suing banks they claim contributed to their “urban blight.”  A federal judge in Memphis, Tennessee, on May 4 and another in Baltimore on April 22 denied Wells Fargo & Co. (WFC)’s request to dismiss the predatory-lending lawsuits brought against the bank. A lawsuit by the city of Cleveland against JPMorgan Chase & Co. (JPM) and Ally Financial Inc. is also pending before an Ohio judge.  In one case, Deutsche Bank AG, described by Los Angeles City Attorney Carmen Trutanich as one of the city’s “major slumlords,” may be found liable for hundreds of millions of dollars, including restitution for current and former tenants, according to a statement by the city.  “We started out looking to sue as many as 16 lenders,” Webb Brewer, a lawyer who represents Memphis, said in a telephone interview. “It’s a tall order to fight all those banks at once. We never alleged that Wells Fargo was alone in employing these practices.”

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