Saturday, January 23, 2010

THE MORTGAGE MELTDOWN: Judge Dismisses Landmark Lending Suit Against Wells Fargo

BALTIMORE—A federal court judge has dismissed a landmark case in which Wells Fargo was accused of causing millions in foreclosures in Baltimore through predatory and discriminatory loan programs.

The judge said it was “implausible” that Wells Fargo caused an economic decline in the inner city, given other issues in the city such as unemployment, poorly performing schools, irresponsible parents, drugs, and violence, The Baltimore Sun reported.

That’s what Wells Fargo officials have been saying since the suit was filed. “From the beginning, we have consistently maintained that Baltimore’s economic problems could not be attributed to the small number of foreclosures Wells Fargo has done in Baltimore,” said Cara Heiden, co-president of Wells Fargo Home Mortgage. “We are pleased the court’s decision rejects the city’s claim and reflects this point of view.”

Baltimore can now appeal or narrow its complaint against Wells Fargo and return to court at a future date.

Similar suits filed by the cities of Birmingham and Cleveland have also been dismissed. Memphis and surrounding Shelby County, Tenn., filed a similar suit last month saying Wells Fargo violated the Fair Housing Act.

The Tennessee suit alleges that Wells Fargo targeted minority communities for predatory practices that have resulted in a disproportionate and unnecessary number of foreclosures in these communities.

“The most tragic aspect of this crisis is that it has hit minority communities the hardest,” remarked Shelby County Mayor Joe Ford. “Because of redlining practices, minority communities were excluded from prime lending and became vulnerable to reverse redlining, an illegal practice which targets these neighborhoods for risky and exploitative loans.”

In Memphis, this has been especially true in the African-American community, he charged. “The concentration of foreclosures in areas targeted for bad loans has resulted in extreme blighting, vacancies, reduced property values, and lower tax revenues. Wells Fargo foreclosures have also created tremendous costs for services such as housing code enforcement and fire and police protection.”

By Dona DeZube, January 7, 2010

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