City officials said they are emboldened by recent discussions they have had with other cities considering similar legal action to recoup revenue lost in a flood of foreclosures.
"The argument that Wells Fargo is putting forward is a smokescreen," said Sterling Clifford, a spokesman for Mayor Sheila Dixon. "Wells Fargo is being sued because they engaged in illegal lending practices."
Since 2000, more than 33,000 Baltimore homes have been subjected to foreclosure filings.
Wells Fargo, one of the two largest mortgage lenders in the city since 2004, made 1,285 loans a year totaling more than $600 million from 2004 to 2006, according to the city's initial lawsuit. City officials say that most of the company's loans resulted in foreclosures, many of them in black neighborhoods.
In the bank's March filing, lawyers argue that the financial institution is being unfairly maligned. It says the city's complaint "alleges - in conclusory and illogical fashion - that it was at least 313 foreclosures over seven years by Wells Fargo that caused the city 'tens of millions of dollars' in damages."
Relying heavily on articles, editorials, graphics and video footage from The Sun about tax lien sales, ground rent and other housing issues in Baltimore, attorneys argue that it is the city that is to blame for recent foreclosures.
The motion says that the city's allegations "fail to discuss its own tax lien sales, which have resulted in 19,000 foreclosure actions being filed against city homeowners ... particularly harming homeowners in minority neighborhoods that are among the city's poorest."
Wells Fargo lawyers argue that more than half of the 2006 tax lien sales in Baltimore "involved properties in census tracts that are more than 80 percent African American." They say that "the city's tax lien sales ... have disproportionately injured minority homeowners in the city's poorest neighborhoods."
City officials said bank representatives were mischaracterizing their actions.
"This is a tactic to smear the city," said Bradley H. Blower, an attorney with Relman & Dane, a Washington law firm that contracted with the city to help with the Wells Fargo lawsuit.
Blower called the city's tax lien process "fair" and explained that homes are only sold at auction after owners are given time to settle their debts.
Nilson, the city solicitor, said that the city gives homeowners as much as two years to pay off debts, much longer than any bank. As a result, most citizens keep their homes.
Blower also said that many of the foreclosures counted as part of the bank's 19,000 figure are properties that are part of Baltimore's Project 5000, a revitalization program that was initiated several years ago to rebuild sections of the city.
Those houses are mostly vacant and have been abandoned for years, he said. And, unlike houses that are foreclosed on by the bank, no one is living in houses taken as part of Project 5000.
"The bank is foreclosing on houses that have real people in them, people who were suckered into bad loans that Wells Fargo sold them," Nilson said.
lynn.anderson@baltsun.com
