Baltimore City’s Practice Blamed For Increasing Foreclosures

May 27th, 2008 | Tags: Foreclosures

Baltimore city is suing a mortgage bank. But the latter is blaming Baltimore city’s practices for the increase in foreclosures. It charged that Baltimore city is selling off houses for unpaid taxes, water bills and other municipal fees.

In January Baltimore had brought legal charges against Wells Fargo for engaging in predatory lending in the low-income minority concentrated localities of the city. Here the number of sub-prime mortgages was double than elsewhere in the city. The increase in foreclosures had led to rise in vacant houses with its attendant problems. The city had to raise funds to meet the rising cost of maintenance primarily concentrated in these pockets.

In March Wells Fargo tried to dismiss the charges by alleging that it is the city that takes more foreclosure actions than the bank. From 2000 to 2007 the city had foreclosed on 19,000 units. The city pleaded that the city had foreclosed on 313 houses in seven years. But Wells Fargo had caused Baltimore ‘tens of millions of dollars’ as damages. The city further contended that the 19,000 numbers had been juggled. It included all those who entered the process of tax lien and not those who lost houses for unpaid bills. As such the dismissal motion was begged to be denied. The bank was making it out to be a case of intentional duping of the city residents by foreclosing for small unpaid water bills. According to the law of the state the city is bound to pursue these sales. The main culprit is Wells Fargo with a record number (33,000) of foreclosure postings since 2000. No other lender has done this much harm.

Since 2004, Wells Fargo is one of two giants dominating the mortgage industry in Baltimore. It has sanctioned 1,285 loans per year amounting to more than $600 million till 2006. In the first part of 2007 the bank foreclosed on 70 units.

Baltimore Reservoir Hill had been busy with activity a year or so ago. But today it looks like a deserted movie set. There is nothing but empty houses, some of them half finished, begging to be sold. In a desperate move the city leaders have tried to nab the culprit – Wells Fargo bank. The bank foreclosures have resulted in millions of dollars lost in tax revenues as well as public investments. This is a case of not denying blacks credit but of luring them into the zone of predatory lending.