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"Baltimore/Wells Fargo Update,"

by Glenn Schlactus September/October 2009 issue of Poverty & Race

The last issue of P&R reported on the City of Baltimore’s landmark fair lending case against Wells Fargo, in which U.S. District Judge Benson E. Legg had just denied Wells Fargo’s motion to dismiss the case. Since then, the case has been transferred to a new judge, who ruled that Baltimore is entitled to the kind of discovery into Wells Fargo’s records and operations that the City was seeking.

Baltimore alleges in the suit that Wells Fargo has been engaged in “reverse redlining”—targeting the city’s African-American neighborhoods for deceptive, high-priced subprime loans that borrowers cannot afford. The result is concentrated foreclosures in these neighborhoods. Wells Fargo avoids harm to itself by selling the loans on the secondary market before they go bad.

The City defeated the motion to dismiss with the help of declarations from Baltimore residents, former Wells Fargo employees and others. The residents, who live very close to some of the foreclosed properties that have become vacant, explained how the foreclosures have caused their neighborhoods to deteriorate and their property values to fall. The former employees described deliberate efforts to target predatory loans at African-American neighborhoods and audiences, such as members of African-American churches, and a culture in which African Americans were derided by Wells Fargo employees as “mud people” with “bad credit” who “don’t pay their bills.” One former employee said that Wells Fargo effectively put a “bounty” on African Americans and other minorities.

After the motion to dismiss was denied, the case was transferred to U.S. District Judge J. Frederick Motz, who considered the parties’ competing discovery plans. The plans addressed the extent to which the parties are allowed to obtain documents from each other and question witnesses in depositions. Wells Fargo wanted to sharply limit discovery and divide it into several phases. Judge Motz denied Wells Fargo’s request and said at a hearing in early August, “essentially, I’m buying the plaintiff’s position.” Judge Motz then scheduled monthly discovery conferences beginning in October to monitor the parties’ progress in discovery and resolve disputes as they arise.

Glenn Schlactus is Counsel at the Relman & Dane law firm, which represents the City of Baltimore. Further information and documents are at

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