The lawsuit claims the bank failed to maintain and market foreclosed homes in minority neighborhoods in Chicago, Memphis and Washington, in violation of the Fair Housing Act.
Deutsche Bank, though, said it is not responsible for maintaining the properties.
"Deutsche Bank as trustee does not engage in any of the activities alleged in the complaint. Loan servicing companies, and not Deutsche Bank as trustee, are solely responsible for the maintenance, marketing and resale of foreclosed properties,” the bank said in a statement sent to the American Banker.
"Deutsche Bank as trustee does not select, hire or compensate the loan servicers, nor does it have any role in, or oversight over, the actions the servicers take in connection with foreclosed properties."
The fair housing organization investigated the maintenance and marketing of foreclosed properties for 39 different types of maintenance deficiencies, such as broken windows and doors, or trash on the property and other damages that could cause health and safety issues to the residents.
In Memphis, for example, it found that 69% of the foreclosed properties in communities of color had substantial amounts of trash, as did 55% of such communities in Chicago, and 52% in the Washington area, Shanna Smith, the NFHA’s president and chief executive, said in a press conference.
The NFHA has filed similar suits against other large banks, including Bank of America, Wells Fargo and U.S. Bancorp. An investigation by American Banker late last year found that the consumer group sometimes bases its complaints on dubious data and that often will fail to provide banks it accuses of mismanagement with addresses of properties that need upkeep.
In June 2013, Deutsche Bank paid $10 million to the City of Los Angeles to settle a similar REO-related lawsuit that accused the bank of "allowing hundreds of foreclosed properties to turn into slum conditions."
HOPE Fair Housing Center of Illinois, Open Communities and South Suburban Housing Center of Chicago joined NFHA in the lawsuit against Deutsche Bank. The investigation was funded in part by a grant from the Department of Housing and Urban Development.