Posted Jan 8, 2008 – Baltimore is suing mortgage lender Wells Fargo Bank, saying the company preyed on Black borrowers, resulting in a heap of foreclosures, reports The New York Times.
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In the lawsuit, Baltimore Mayor Sheila Dixon and members of the City Council are asking the court to prevent Wells Fargo from charging Blacks higher lending fees, many of which are under the high-risk “sub-prime” lending program.
The bank made high interest loans to 65 percent of its Black customers in the city, while only 15 percent of the White customers in the same area received the same kind of loan, according to the complaint. In 2006, half of Wells Fargo’s foreclosures were neighborhoods that were more than 80 percent Black, the suit said.
During the housing boom, the suit alleges, Wells Fargo let brokers receive higher commissions for giving customers higher interest rates than they could afford.
Between 2004 and 2006, the lending company made 1,285 loans to city residents, bringing in a whopping $600 million to the company, the Times reports. But now, out of all of the lenders, Wells Fargo has the most foreclosures (foreclosure-related events in the city rose more than five times during the first part of last year), according to the suit.
So why is Baltimore the entity filing the lawsuit? Because, according to the suit, the increase in foreclosures has cost the city considerably in tax income, not to mention the high costs of shelling out money to restore vacant and abandoned properties, as well as other unforeseen expenses, reports the Times.
“This wave of foreclosures in minority neighborhoods really threatens to undermine the tremendous progress the city has made in developing distressed neighborhoods and moving the city ahead economically,” Suzanne Sangree, chief solicitor for the Baltimore City Law Department told the paper.
But Wells Fargo spokesman, Kevin Waetke, denies race being a factor in any of its loaning practices.
“We do not tolerate illegal discrimination against or unfair treatment of any consumer,” Waetke told the Times.