A federal judge has dismissed a lawsuit against Wells Fargo & Co.’s bank subsidiary. The company was accused of causing foreclosures in Baltimore.
United States District Judge J. Frederick Motz today granted Wells Fargo Bank, N.A.’s, motion to dismiss the lawsuit, which was originally filed during January 2008 by the City of Baltimore in U.S. District Court for the District of Maryland.
Baltimore alleged that predatory and discriminatory lending practices by the bank harmed the city. The alleged practices by Wells, which included reverse redlining, caused a disproportionately high foreclosure rate in Baltimore’s black areas.
The city claims that the associated decline in home values has pushed its property tax revenues lower. In addition, increased crime has cost the city more.
But the judge disagreed.
“Using the city’s own figures, Wells Fargo is responsible for only a negligible portion of the city’s vacant housing stock,” Motz wrote in the decision. “The city’s allegations in the amended complaint of a causal connection between Wells Fargo’s alleged misconduct and the damages the city claims is not plausible.”
In a statement, Wells applauded the decision — which it noted was consistent with similar cases in Birmingham, Ala., and Cleveland that have also been dismissed against lenders.
“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,” Wells Fargo Home Mortgage Co-President Cara Heiden said in the statement.
The judge indicated that the motion to dismiss was granted, however, “with leave for the city to file a second amended complaint asserting narrower claims.”
Mayor and City Council of Baltimore, Plaintiff, v. Wells Fargo Bank, N.A. and Wells Fargo Financial Leasing Inc., Defendants.
Case No. 08-00062-BEL, Jan. 8, 2008 (U.S. District Court for the District of Maryland).
Baltimore Blames Wells for Foreclosure Woes
A lawsuit filed against Wells Fargo Bank, N.A., by the City of Baltimore alleges the lender is responsible for “tens of millions of dollars” in lost tax revenues to the city because of a few hundred foreclosures during the past seven years. In its request for a dismissal, Wells countered that the city itself was responsible for nearly 20,000 foreclosures during that same period.