A federal court in Maryland dismissed for lack of standing a lawsuit brought by the City of Baltimore against Wells Fargo, which alleged that Wells had engaged in the practice of “reverse redlining.” The suit, which garnered substantial publicity and resulted in several court decisions from prior attempts by Wells to have the case dismissed, alleged that Wells Fargo “targeted” minority borrowers for subprime mortgage loans, which was alleged to have harmed the City by way of lost tax revenue resulting from foreclosures, as well as increased crime and expenses. Disagreeing with the judge previously assigned to the case, the court held that the City’s allegations were based on “implausible” causal connections that could not satisfy Constitutional standing requirements, given the relatively small number of Wells foreclosures in Baltimore compared to the overall number of foreclosures in the City. The court’s rationale in finding the City lacked standing to sue was similar to that of the judge in Alabama who last year dismissed virtually identical claims by the City of Birmingham against several lenders, as reported in the August 25, 2009 Alert. Click here for City of Baltimore v. Wells Fargo Bank, No. 1:08 CV-00062 (D. Md. January 6, 2010).
Alert January 12, 2010