Baltimore Sues Wells Fargo, NAACP Backs Off

April 11, 2010

The city of Baltimore filed a complaint Wednesday against Wells Fargo & Co. in Federal Court claiming, “Wells Fargo’s discriminatory practices, and the resulting unnecessary foreclosures in the city’s minority neighborhoods, have inflicted significant, direct, and continuing financial harm on Baltimore”.

Today the NAACP dropped their lawsuit against Wells Fargo & Co. after working with the bank to identify ways of improving “fair credit access, sustainable homeownership and financial literacy for communities of color”. The NAACP said it is still suing 14 other lenders, including Citigroup Inc, HSBC Holdings Plc and JPMorgan Chase & Co.

In 2008 Baltimore became the first major U.S. city to accuse a mortgage lender of violating the federal Fair Housing Act. This is the second claim filed by the city of Baltimore, the first complaint was filed 3 months ago, but was dismissed by U.S. District Judge J. Frederick Motz as ‘too broad’. Judge Motz gave the city permission to sue the company based on specific homes and neighborhoods where they believed damages could be traced directly back to the practices of Wells Fargo & Co.

The amended complaint filed by the city of Baltimore identifies specific expenses they claim were incurred by the city because of Wells Fargo & Co. foreclosures. Those claims include costs for inspections, condemnation and boarding up of homes and increased police and fire costs. The continuing financial harm claimed by the city comes from lost revenue from property taxes due to high foreclosure numbers and lost property value. The lost property value, the city claims, is due to the high concentration of nearby Wells Fargo & Co. foreclosures.

Municipalities across the nation are finding themselves in an economic crunch because of the foreclosure rates in their cities, insufficient pension funds and an entire host of financial obligations they now have less revenue to cover. As this slow recovery continues we could see more and more cities, and possibly individual consumers, file complaints of their own against the top mortgage holders of the nation.