U.S. District Judge J. Frederick Motz has ordered Wells Fargo to submit the electronic data on all loans it issued in Baltimore, Maryland. He also ordered Wells Fargo officials to make themselves available for depositions.
Motz's rulings were made in connection with the city of Baltimore's lawsuit filed against Wells Fargo. The city accused the bank of practicing unfair lending and targeting minority communities. The lawsuit alleged that Wells Fargo's unfair lending practice contributed to the bank foreclosed home crisis.
Lawyers involved on the city's lawsuit said that they plan to analyze the electronic data that will be submitted by Wells Fargo for racial discrimination pattern. They pointed out the bank's issuance of bad loans to targeted minority communities led to an increase in foreclosure properties that drained the city's coffers in terms of lost property taxes and costs of sanitation services and extra police.
The city filed the case against Wells Fargo in January 2008 but has just entered into the discovery phase. Two former employees of Wells Fargo submitted affidavits stating that the bank intentionally enticed black borrowers to take out subprime loans with higher interest.
Distressed homeowners filing lawsuits against their lenders for allegedly forcing them into foreclosures have been happening across the country. However, the Baltimore case is unique in itself because it is not just individual homeowners but the city itself that endured the effects of unpaid lending practices.
Wells Fargo denied the allegations made by what it called as disgruntled former employees. In a federal court proceeding, officials of Wells Fargo disputed the unfair lending practice allegations made against the bank, adding that race has never been a factor in mortgage loan rates.
Lawyers representing Wells Fargo asserted that the city could not prove financial damages because foreclosure houses under the bank's portfolio represented just a small portion of the total foreclosed properties in Baltimore.
Andrew L. Sandler, a lawyer of Wells Fargo, expressed his certainty that the case against the bank would be dismissed on the issue of financial damages. He sought to focus the discovery phase of the case on mortgages linked to foreclosed-upon homes. The bank identified about 143 foreclosures on its properties in Baltimore from January 2005 to December 2008, adding that during the period, there were nearly 33,000 foreclosure homes in the city.
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