Baltimore Is Suing Bank Over Foreclosure Crisis

New York Times ^ | January 8, 2008 | Gretchen Morgenson

[Lorianne]

Baltimore’s mayor and City Council are suing Wells Fargo Bank, contending that its lending practices discriminated against black borrowers and led to a wave of foreclosures that has reduced city tax revenues and increased its costs.

The recent surge in homeowner defaults nationwide, generated by lax lending practices during the real estate boom, has officials bracing for a range of problems that often accompany foreclosures. Some municipalities, including Cleveland and Buffalo, are trying to make lenders responsible for abandoned properties to ward off crimes like arson, drug use and prostitution.

But the civil suit that officials in Baltimore are filing in United States District Court may presage another type of litigation against lenders by municipalities facing shortfalls in their budgets.

In the suit, Mayor Sheila Dixon joined with the City Council to ask that the court bar Wells Fargo from charging higher fees to black borrowers. Many of these borrowers paid more under the bank’s subprime lending program, designed for less creditworthy consumers, and are more likely to default on their loans.

[Lorianne]

Isn't Mayor Dixon the one who thew a shoe at a white city councilman and saying "Now the shoe is on the other foot" ?

[theDentist]

How long until ‘Bama and Hillary start demanding that loans for any Minority be at least 1/2% below Prime?

[TexanToTheCore]

The other side of the coin.

[ccmay]

The banks got sued for red-lining (i.e. not lending to blacks with poor credit); now they are being sued for predatory lending (i.e. lending to blacks with poor credit.)

[Salgak]

And yet when cities complain about banks not lending for urban properties, they whine too. . .

You can’t have it both ways. . .

[Niteranger68]

Don’t loan them money and you are racist. Loan them money and you are predatory. This is a no-win for lenders.

[Right Cal Gal]

Hmm...and the City’s standing to sue to bank comes from WHERE?

[oh8eleven]

Liberalism, fails every time it’s tried.

[Fee]

This is crazy. Now Baltimore is contending that the situation is created because the banks did not use “traditional” criteria to qualify the loans. If the banks had used “traditional” criteria, many blacks in Baltimore would not be qualified for the loans, and that would bring accusations of red lining or minorities were treated too harshly. In the past banks were told by state and federal government to loosen up on the minorities.

[Lorianne]

Yep, that’s about the size of it.

[Old North State]

How long until ‘Bama and Hillary start demanding that loans for any Minority be at least 1/2% below Prime?..

What’s been lost in this whole sub-prime mess is the fact that the democrats and other race-baiters Mau-Mau’ed banks to make subprime loans or be accused of ‘redlining’ minority communities out of access to credit. It started in the 80’s and bloomed when Clinton got ‘Fair Credit’ regulations in place in the nineties forcing banks to make loans to credit risks in order to meet targets of face sanctions.
The banks are not completely off the hook because they took it up with a vengeance once they figured out how to slice bad credit risks into’products’ they could sell off.

[Oshkalaboomboom]

Why doesn’t Baltimore sue the Teacher’s Union for preparing the students so miserably that they couldn’t figure out that an ARM means the interest rate could go up some time in the future?

[trisham]

It’s my understanding that the current foreclosure “crisis” was caused by mortgage companies, not banks.

[ModelBreaker]

Let's see. I read the first sentence. Can I guess the rest of the article? It's based on one of two statistics--black people have higher interest rates or more foreclosures.

Now I can read the article and see if I'm right.

[icwhatudo]

Wells Fargo was charging higher fees to certain borrowers. These borrowers paid more under the bank’s subprime lending program, designed for less creditworthy consumers that the bank felt were more likely to default on their loans.

Looks like the bank was right.

[rabscuttle385]

I wonder if this lashing out at the banks by the Baltimore loons has anything to do with the fact that as property values in many areas begin to correct, property tax revenues may begin to decline, hurting the ability of local and city governments to keep their promises (which were made based on the idea that housing prices would keep going up forever).

Any FReeper who sees error in my logic, please feel free to (gently) correct me.

[DCPatriot]

Some municipalities, including Cleveland and Buffalo, are trying to make lenders responsible for abandoned properties to ward off crimes like arson, drug use and prostitution.

The issue is that the banks take too long to place the property 'for sale'.

There are 18 MILLION vacant homes across the country....but there are ONLY 2 MILLION of them 'for sale'.

The banks don't take the 'loss' on the books until they are 'sold'....thus they hold them for lengthy periods.

[Right Cal Gal]

Also for not reading their paperwork on interest-nly loans that advised that the five years of unpaid principal would be due and owing at the end of the interest-only term

[JackDanielsOldNo7]

Can we please not post that picture of Kerry and Edwards? It looks so gay!!

[rabscuttle385]

Oops! I should have read the article first. FTA: "The complaint requests unspecified damages to cover the diminished property tax revenues and higher costs that the city said it had incurred. Additional costs include those for fire and police protection in hard-hit neighborhoods and expenditures to buy and rehabilitate vacant properties."

Stupid liberals...always the victim.