City says bank was predatory

January 29, 2009|By Tricia Bishop | Tricia Bishop,tricia.bishop@baltsun.com

Attorneys for Baltimore City argued yesterday for the continuance of a potentially groundbreaking federal lawsuit against Wells Fargo Bank, alleging that the mortgage provider has a pattern of predatory lending in black neighborhoods that leads to foreclosures, vacant properties, lost tax revenue and significant legal fees.

Wells Fargo filed a motion to dismiss the year-old lawsuit, claiming it is "legally deficient," in part because the city's complaint doesn't detail actual injury caused by the California company. A hearing on the motion was held in Baltimore U.S. District Court yesterday afternoon.

Saying that the city was so "thirsty for revenue" that it had to sue companies, Wells Fargo attorney Andrew Sandler blamed Baltimore for its foreclosure problems, particularly its tax lien system and high property taxes. There "is not a single assertion that's beyond mere speculation that Wells Fargo is the problem," Sandler said.

City lawyer John Relman said Baltimore would show "the precise injury" if the case went forward. In its complaint, the city says Wells Fargo targeted black communities to distribute risky subprime loans, making it "one of the leading causes of the disproportionately high rate of foreclosures" in such neighborhoods.

Similar court cases and complaints are cropping up across the country, including in Texas, Tennessee and California. This month, the National Community Reinvestment Coalition announced that it filed a discrimination complaint against credit rating agency Standard & Poor's, and a California federal court judge allowed the National Association for the Advancement of Colored People to pursue its lawsuit against nearly two dozen mortgage lenders.

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