Judge denies city complaint tying Wells Fargo to blight

City says dishonest loans caused unnecessary foreclosures, loss of tax revenue

September 14, 2010|By Jessica Anderson, The Baltimore Sun

A complaint filed by the city alleging that Wells Fargo Bank is liable for lost property tax revenue because some houses that went into default were in poor condition was denied by a U.S. District Court judge Tuesday.

Judge J. Frederick Motz dismissed the city's complaint, the second against the bank, alleging that vacant houses fell into disrepair as a result of Wells Fargo's steering residents toward more expensive subprime loans, causing them to default. However, he permitted the city to file a third amended complaint by the end of next month.

Motz's opinion said the city should pursue the third complaint "if it can prove property-specific injuries inflicted upon it at properties that would not have been vacant but for the allegedly improper loans made by Wells Fargo."

The city first filed suit against the California-based bank in 2008, lodging primarily a civil rights case that accused the bank of violating the Fair Housing Act by targeting black churches and low-income, minority neighborhoods with dishonest loans borrowers could not afford. A judge dismissed that case as "implausible."

Wells Fargo denies the city's accusations and says Baltimore, which faces a budget crisis, is suing to generate revenue.

In the latest complaint, the city's attorneys focused on the alleged damages caused by more than 250 properties identified as blighted houses because of unnecessary foreclosures resulting from dishonest loans.

Vermin, repeated visits by police and firefighters, and sometimes up to a half-dozen visits by housing code inspectors per year are recorded for most houses listed. The city's complaint also included declarations from 11 homeowners who live next to Wells Fargo foreclosure properties. They contend that the vacant houses have led to additional problems, such as fires set by squatters, pit bulls running wild in yards and one case of a cockroach from a vacant house becoming lodged in a child's ear.

jkanderson@baltsun.com

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