Baltimore Anger Against Lenders For Triggering Foreclosures

Only about a year ago the area around Baltimore Reservoir Hill was bustling with activity with construction workers zooming in and out. But suddenly life has come to a standstill. There is an eerie silence. This is foreclosure personal and close. The place is dotted with abandoned house and for-sale signs. The locals are furious. They want a to indict some of these sub-prime lenders.

The Mayor of Baltimore, Sheila Dixon and the city council are suing Wells Fargo – one of the king lenders in the area. The foreclosures have not only affected the borrowers by putting out their home fires but also drastically reduced the income from property taxes. The company is also being charged for racial discrimination.

Dixon alleges that in Baltimore these lenders have been advancing credit to the blacks on unfair terms because of the colour of their skin. In the lawsuit Wells Fargo is accused of charging higher fees and rates from black borrowers. A survey reported that in 2006 of all the black borrowers 65% had to accept high-rate loans as compared to 15% of the whites. In Baltimore there are four times more black foreclosure victims than whites.

Advocate John Relman argues that when a particular community is four times more affected than the other, obviously something is wrong in the line of approach. Kevin Waetke of Wells Fargo dismissed the charges as false. The company should not be charged for racism. Its interest rate was related to the risk factor. Those with bad credit history had to pay more. The continued growth of the company depended on customer satisfaction.

Another advocate Larry Platt who pleads for lenders dismisses the lawsuit summarily. At random mud is being thrown in the hope that some may hit the target. The only way to substantiate these racist charges is to comb through each file of the lender. So far there is an explanation as to why a particular borrower was offered a particular rate. Invariable it comes down to the grass root level of the risk factor and credit record. It has no link with race. This reply does not answer the question as to why more blacks have black credit record. The only way out of this impasse is to allow the city of Baltimore access to all the files of Wells Fargo. But will a judge allow that?

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