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Baltimore Files Lawsuit Against Mortgage Lender
Published: January 08, 2008
Baltimore--Baltimore Mayor Sheila Dixon's administration will file suit today in U.S. District Court alleging California-based Wells Fargo Bank has engaged in predatory lending practices in black neighborhoods, The Baltimore Sun reported Tuesday.
The potentially groundbreaking lawsuit, which the Sun says could be the first in which a city tries to recoup foreclosed home costs, revolves around allegations that the lender practiced reverse redlining, selling high-interest subprime mortgages to black Baltimore citizens more often than to white residents. Reverse redlining is a violation of federal housing law.
Since 2004, Wells Fargo has been one of Baltimore's two largest mortgage providers. The bank made 1,285 loans a year--cumulatively worth more than $600 million--from 2004 to 2006.
More than 33,000 Baltimore homes have been foreclosed since 2000. Five times as many foreclosure events, including default notices and foreclosure sales, occurred in Baltimore from the first to the second quarter of 2007.
Most of the Wells Fargo loans that ended in foreclosure were for properties in primarily black neighborhoods and 70 percent had fixed interest rates, which should have allowed the bank to forecast its borrowers would not be able to handle the payments, according to Baltimore city officials.
Wells Fargo said in a statement that its pricing is not affected by race.
