The Mayor and the City Council of Baltimore, Maryland have sued Wells Fargo. Their Complaint presents Wells Fargo and its Liability Insurance Companies with many Insurance Coverage Questions to address, there can be no doubt.
In their Complaint, the Mayor and the City Council ask the United States District Court to enjoin the bank from charging higher home loan fees to Black people than to White people. Many Black people in Baltimore paid higher and more fees under the bank's subprime loans which, by definition, are made to people who have less credit worth or lower credit ratings. These people are high credit risks and more likely to default.
Wells Fargo is alleged in the Complaint to have filed the largest number of foreclosures in Baltimore. Here are some interesting numbers: Around 50% of the Wells Fargo foreclosure filings in 2006 involved areas of the City with a Black population of over 80%. Only 16% of its foreclosure actions in the same period involved White borrowers. All these allegations are summarized in another insightful piece of news reporting and analysis by Gretchen Morgenson, "Baltimore is Suing Bank Over Foreclosure Crisis" p. A12, col. 5 (New York Times Nat'l Ed., Tuesday, January 8, 2007).
The Damages claimed in the City's Complaint include damages allegedly incurred by Baltimore as a result of the bank's foreclosures, among other costs to the City: lowered property tax revenues, higher expense for police and fire protection for neighborhoods flowing with foreclosures, and the costs of buying and rehabilitating properties left vacant as a result of the foreclosures. The City alleges that between the First Quarter of 2007 and the Second Quarter of 2007, "foreclosure-related events" in Baltimore rose by 500% or by 5 times.
A statistical analysis of foreclosure costs incurred by the City of Chicago and in Cook County, Illinois in recent years concluded that each foreclosure cost the government $34,199.00. Baltimore alleges this analysis in its current Complaint for damages.
Wells Fargo will certainly turn to its Liability Insurance Carriers for a defense and indemnification. The Insurance Coverage Issues will be as enormous as the case itself. And as enormous as other cases like it that are reported in the New York Times article linked on this post.
Download here_Mayor_and_City_Council_of_Baltimore_v. Wells Fargo USDC Complaint Filed 01.08.08).pdf is a downloadable copy of Baltimore's Complaint as it was electronically filed with the District Court. It contains embedded images of maps and census districts, which are part of the allegations in this Complaint. Downloading and searching the electronically filed copy of this Complaint may require much patience. This huge (39-page) Complaint was filed on January 8, 2008 by the Mayor and City of Baltimore v. Wells Fargo Bank, N.A. and Wells Fargo Financial Leasing, Inc., Case No. L08CV 062 in the United States District Court for the District of Maryland, Baltimore Division.
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