Wells Fargo cites condition of city-owned houses in its defense

An attorney for Wells Fargo offered a detailed and spirited rebuttal Monday to the city of Baltimore’s legal claims that the bank targeted African Americans for predatory loans, which led to hundreds of home foreclosures and millions of dollars in government expenses and lost tax revenue.

The city sued the bank last year, alleging reverse redlining in majority black neighborhoods, a practice that it contends ultimately cost hundreds of city residents their homes, expanded Baltimore’s stock of vacant and abandoned properties and increased the crime, rat and safety problems associated with them. In depositions for the city, two former employees of the California-based bank have described racially-discriminatory practices and incentives to steer high-cost loans to African Americans.

But Andrew L. Sandler, an attorney for Wells Fargo, disputed the city’s allegations in a hearing before U.S. District Judge Benson Legg. He derided the city’s case as a “theory in search of a lawsuit” and provided financial information on a handful of Wells Fargo foreclosures – data not previously disclosed — that undermined key elements of the city’s lawsuit.

In dueling Power Point presentations, lawyers for the two sides made their respective pitches to keep the lawsuit alive or have it thrown out. Judge Legg is expected to rule on Wells Fargo’s motion to dismiss the case in the coming days.

John P. Relman, a Washington attorney hired by the city, told the court that the expense to the city of securing and maintaining abandoned property is real, quantifiable and recorded in city housing files. He cited the example of a Wells Fargo foreclosed property at 3003 Bonner Road where the city spent $2,603.23 just to board it up (eight times) and clean it (seven times) since 2007.

A Bonner Road neighbor, Genevieve Matthews, detailed in a city deposition yet another problem: squatters and the threat of a fire. She was among 11 city residents whose personal experiences of living near a foreclosed property showed that the impact of foreclosures on the city went beyond dollars and cents.

But Sandler, the Wells Fargo attorney, cited the Bonner Road property to the court for another reason – as an example of the flaws in the city’s case.

While the owner of the property was African American, he was an investor and a co-owner of a real estate investment firm who had seven other properties. He defaulted on his fixed rate loan, Sandler said, because he was overly extended. The house was damaged before Wells Fargo took control of it and a Baptist church has owned it since February of 2008, he added.

Sandler used nine other properties cited by city lawyers to underscore his case for dismissal of the lawsuit. Two houses located on Shirley and Beehler avenues, for example, were owned by a white investor from New Jersey who defaulted on fixed rate loans because of “excessive obligations;” he said. The city cited the houses with code violations long before foreclosure actions were taken, the lawyer added.

As he detailed the specifics of the 10 properties, Sanders often included the numbers of city-owned houses that were in the immediate area. He showed photographs of a few that were in deplorable condition, suggesting the city was responsible for a sizable portion of Baltimore’s vacant housing problem.

“Lawsuits like this are not the way to rectify these problems,’’ Sandler said.

By ANN LOLORDO

Ann LoLordo was a longtime reporter and editor for The Baltimore Sun.