A federal judge raised doubts Monday about the city's ability to prove huge financial losses from houses left vacant by Wells Fargo foreclosures, the latest development in a landmark civil suit alleging a pattern of racially based, discriminatory lending by the mortgage broker.

U.S. District Judge J. Frederick Motz said he might pare the case, if not outright dismiss it.

"Should we go down that road? ... It's going to cost a lot of people a lot of money, including the taxpayers," said Motz, who took over the case in August after the previous judge discovered a conflict of interest.

Monday's hearing was at least the third held to discuss dismissing the case, which was considered groundbreaking when it was filed in January 2008, in the wake of the subprime mortgage crisis. But the suit has taken on an onerous tone as time has passed and two similar suits filed by other cities were dismissed. Baltimore continues to fight for permission to proceed, saying it can provide evidence that others have not.

The city's lawsuit claims that Wells Fargo Bank, based in California, pushed African-American borrowers into loans they couldn't afford through an illegal practice known as "reverse redlining," which led to a disproportionate number of foreclosures - and consequently vacancies - in black communities. A former employee, in a deposition, called the practice routine and joked that loan officers were "riding the stagecoach to hell" for steering minorities to higher-rate loans.

The city says the practice, which Wells Fargo vigorously denies, caused tens of millions of dollars in lost revenue and increased costs, mostly through related crime and property maintenance, including boarding up buildings.

"That's a lot of plywood," said Motz, who suggested that the case might be better focused on damages that are "building-specific" - meaning what a single Wells Fargo vacancy cost the city - rather than "generalized damages to communities."

In an October court filing, the city said it had thus far identified 401 Wells Fargo foreclosures in the city from 2005 through 2008. About 230 of those were houses vacant at some point after the loan originated, and most of those - 71 percent - were in black neighborhoods.

About half of those houses remain vacant, which causes their neighbors' property values to drop, alongside tax and real estate revenue, the city says. Crime also rises - from squatters, vandals and looters - as does the need for more fire and police officials on duty to respond to it.

But when taken as part of the whole, it's tough to see the direct consequences. There are as many as 30,000 vacant properties throughout Baltimore, and Motz suggested that trying to gauge the citywide consequences of one vacant property on a street that has nine more is futile.

"Why have the expense? I can tell you now it's silly," said Motz, who also acknowledged that the "deterioration of the inner city" is "shocking" and "disturbing." Motz presided over a death-penalty case this spring in which witnesses described the desolation in some areas.

Baltimore's lawsuit was originally touted as the first filed by a city against a mortgage broker to recover money lost from foreclosure, though comparable suits were also filed in Cleveland and Birmingham, Ala. Both of those suits were dismissed, largely for lack of solid evidence.

Attorney John Relman, one of a team representing the city in the lawsuit, asked Motz for a chance to show what others could not: actual, specific data.

"We can do this analysis," Relman said. "Before you make a decision ... allow us to submit that expert report."

In criminal cases, prosecutors hold parties responsible regardless of their contribution to overall crime, and the same should be true here, Relman argued, adding that the case "is not going to cost millions of dollars."

"This case cannot and should not be put out prematurely," he said.

Meanwhile, Wells Fargo suggested that it has already gone on too long. The company has accused the city of being so cash-strapped that it has to sue for revenue and has said there are too many possible factors to show what caused a vacancy, including the economy, unemployment or divorce.

"The bottom line, your honor, is that the city cannot show [the] fairly traceable injury ... that they allege," said Wells Fargo attorney Andrew Sandler. "They're trying to take a set of problems that the city of Baltimore needs to deal with and misplace the blame on one particular lender."

Motz said he'll bear the consequences of his decision, though he gave no guidance as to when that might be.


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