Wells Blamed for the Flood of Bank REO Properties in City
July 2nd, 2009 by 
Joseph Smith
Lawyers for Wells Fargo and Co., a mortgage lending company, have urged U.S. District Judge Benson Legg to dismiss a case filed by the city of Baltimore, Maryland blaming it as the cause of the flood of bank foreclosure properties in the area.
In its lawsuit, the city claimed that Wells Fargo had preyed on black communities in the area with subprime loans, driving many homeowners to go into default and eventually, foreclosures.
According to Legg, he would decide whether to conduct a trial on the initial lawsuit to be filed in court by a city. The allegation contends that a mortgage lending company violated the Fair Housing Act federal law with predatory loans that push higher the number of bank REO properties.
In New York, the U.S. Supreme Court has ruled that the city’s office of the attorney general has the authority to conduct an investigation on whether major banks practiced discriminatory lending against minorities who were seeking mortgages.
Meanwhile, in Baltimore, the lawsuit it filed against Wells Fargo alleged that the bank discriminated against African American borrowers by enticing them with high-cost subprime loans even when some of them would have been eligible for prime-rate mortgages.
The city claimed that the policies of Wells Fargo had led to an increase in the number of bank REO properties in targeted neighborhoods, leading to the devastation of the city’s economy due to low tax revenue and exacerbating housing, police and fire costs.
Tony Paschal, former loan officer in Wells Fargo, stated in his affidavit that loan officers from the banks were made to categorize African Americans as those who do not pay their bills and were often referred to as mud people or niggers.
Wells Fargo attorney Andrew Sandler argued that there is lack of evidence showing that the bank intentionally targeted African American borrowers or that they were encourage to go the route of subprime loans with high interest rate.
According to Sandler, out of the 143 foreclosure cases, 100 were due to excessive obligations, 43 were due to illness and job loss accounted for 41.
From 2005 to 2008, over 60 percent of Well Fargo’s bank REO properties were located in city sections where inhabitants are 60 percent blacks.
