Baltimore city revives suit against Wells Fargo

New complaint sites specific damage to the city resulting from foreclosures

April 07, 2010|By Robbie Whelan | robbie.whelan@baltsun.com

Lawyers for the city of Baltimore have prepared a new complaint in their reverse-redlining lawsuit against Wells Fargo, which alleges that the bank steered black borrowers into subprime loans and then foreclosed on hundreds of city houses, leading to blight and high public safety costs in low-income neighborhoods.

The city suffered an embarrassing setback in January when U.S. District Judge J. Frederick Motz dismissed the historic lawsuit -- which was the first time a municipality had sued a bank for discriminatory lending practices since the national foreclosure crisis -- saying that the connection between the Wells Fargo foreclosures and urban problems were "implausible when considered against the background of other factors leading to the deterioration of the inner city."

The judge's opinion went on to decry Baltimore's widespread unemployment, drug use, bad schools, irresponsible parents and violence, and urged the city to "restrict its claims to specific damages allegedly suffered because of actual houses made vacant by Wells Fargo's lending practices."

City Solicitor George Nilson said Wednesday that the new complaint, which had not been filed in U.S. District Court by 5 p.m. Wednesday, does just that, outlining specific property damages -- including millions in costs to city fire and police services -- to more than 200 vacant, foreclosed properties spread out over 36 city blocks.

The new complaint also uses "expert analysis" to separate damages incurred by the city in the form of lost property taxes, Nilson said. When the foreclosed homes became vacant, the city alleges, many of them lost much of their value and drove down the values of nearby homes, leading to lost property tax revenue for the city.

Wells Fargo's attorney, Andrew L. Sandler, a partner with BuckleySandler LLP in Washington, said Wednesday he thought that Motz's reasons for dismissing the last version of the case were "pretty clear," and said the case has no merit.

"The city is better at issuing press releases than litigating this case," Sandler said. "We would hope that they would have taken the judge's dismissal of their case seriously and not file a new meritless case. If they do, we will respond as appropriate."

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