A federal judge dismissed Baltimore City's lawsuit against Wells Fargo yesterday, saying it was implausible that the mortgage lender's business practices had done as much damage as the city claimed.
"In the present case, the city's allegations . . . of a causal connection between Wells Fargo's alleged misconduct and the damages the city claims is not plausible," Judge J. Frederick Motz wrote in his decision, released Jan 6.
The city had claimed that Wells Fargo's reverse redlining—targeting loans with onerous terms or high interest rates to African-American neighborhoods—predictably led to foreclosures, and that those foreclosures cost the city millions of dollars in lost tax revenue, increased policing, boarding-up vacants, etc.
The evidence didn't show that, Motz found.
"[U]sing the city's own figures, Wells Fargo is responsible for only a negligible portion of the City's vacant housing stock," the judge wrote.
Wells Fargo issued a press release reiterating its "long-standing vision" to "help all of our customers succeed financially, and that includes lending fairly and responsibly to people across the credit spectrum who want to achieve the dream of homeownership and have the ability to repay their loans."
The city had alleged that Wells sent loan officers in the African-American churches, where they pitched their loans as part of wealth-building seminars. A City Paper review of some of the foreclosures in the case found not struggling first-time home-buyers but investors and mortgage fraud.
Wells Fargo received a $25 billion taxpayer bailout in 2008, and promptly bought the failed Wachovia Bank for $12.7 billion. Wells paid back the $25 billion in December 2009. It said it had paid about $1.4 billion in dividends to the government.
City Solicitor George Nilson told the Sun he might file a new complaint on narrower grounds.