Baltimore vs. Wells Fargo Moves Forward

The city of Baltimore launched a relentless campaign back in January of last year against one of the nation’s largest banks, Wells Fargo. Baltimore is suing Wells Fargo under the Fair Housing Act for reverse redlining, meaning the bank allegedly targeted black neighborhoods in Baltimore for predatory residential mortgage loans.
The city’s attorneys cleared a major hurdle in the case last week, when a federal judge denied Wells’ motion to dismiss. ""Judge Benson Legg"":http://www.mdd.uscourts.gov/Opinions/Opinions/WellsFargoMemo.pdf of the Maryland Federal District Court said the court plans to move forward to the next stage of litigation and discovery in the city of Baltimore’s lawsuit.
The city contends that Wells Fargo’s lending practices from 2000 to the present have resulted in particularly high foreclosure rates and vacant properties in some of its most vulnerable, at-risk communities. The city of Baltimore claims damages of tens of millions of dollars stemming from the vacancies, including decreased property tax revenues, increased police and fire department costs, and the cost of boarding up and managing the vacant properties.
Cara Heiden, co-president of Wells Fargo Home Mortgage, said in a ""press statement"":https://www.wellsfargo.com/press/2009/20090702_Baltimore from the bank, ""We continue to believe that this lawsuit lacks merit. We welcome the opportunity to set the record straight and demonstrate the many controls we have in place to ensure fair, responsible, and nondiscriminatory lending for all our customers.""
The bank said that while the city claims Wells Fargo is responsible for its many revenue-related problems, it also cites in the lawsuit that less than 1 percent of Baltimore’s 33,000 foreclosures were associated with Wells Fargo. During the same period of time, the bank says it made $3.5 billion in home loans, most of which were prime mortgages.
Heiden added, ""We have responsibly made homeownership possible for Baltimore borrowers using the many controls we have in place to ensure race is not a factor in the pricing and products we offer.""
However, according to a ""_New York Times_"":http://www.nytimes.com/2009/06/07/us/07baltimore.htmlx_r=7&th&emc=th report last month, a former subprime loan officer with Wells Fargo substantiated the city’s accusations of discriminatory and predatory lending practices at the bank. The employee told the paper that she and her colleagues at Wells systematically singled out blacks in Baltimore and suburban Maryland for high-interest subprime mortgages. Judge Legg specifically cited statements from this employee and one other loan officer in ""last week’s ruling"":http://www.mdd.uscourts.gov/Opinions/Opinions/WellsFargoMemo.pdf as ""sufficient proof to proceed"" with the suit.
The Baltimore-Wells Fargo faceoff prompted a Congressional hearing in late June to examine accusations against lenders of deliberate racial steering into subprime loans. New York Rep. Carolyn Maloney opened the hearing by saying, ""Today, almost 1 in 6 subprime mortgages are in foreclosure compared to 1 in 40 prime mortgages in the United States.""
Maloney went on to say, ""Evidence continues to come to light that many of the subprime borrowers who had pay stubs to prove their employment — and may have qualified for prime loans — were steered into more costly no doc loans by some lenders.""
The ""National Association of the Advancement of Colored People"":http://www.naacp.org/home/index.htm (NAACP) has also filed a class-action lawsuit against more than a dozen banks, including Wells Fargo, charging premeditated racial discrimination in their mortgage lending. The NAACP claims that during the subprime boom, black homebuyers were more than three times more likely to be saddled with an alternative, nonprime loan than white borrowers with comparable credit scores and income.