Memphis v. Wells Fargo and Baltimore v. Wells Fargo
Relman, Dane & Colfax is litigating two Fair Housing Act lawsuits against Wells Fargo alleging that Wells Fargo has engaged in “reverse redlining” - intentionally targeting minority communities for predatory mortgage loans with discriminatory and unfair terms. The firm represents the City of Baltimore in one case (in the U.S. District Court for the District of Maryland) and represents the City of Memphis and Shelby County, Tennessee, in the other (in the U.S. District Court for the Western District of Tennessee). On April 22, 2011, and May 4, 2011, the federal courts in Maryland and Tennessee, respectively, issued important decisions denying Wells Fargo’s motions to dismiss the lawsuits.
The suits allege that Wells Fargo’s discriminatory lending practices have resulted in extraordinarily high rates of foreclosure in minority neighborhoods. These foreclosures cause Baltimore, Memphis, and Shelby County to lose property tax revenues and to spend additional funds for critical municipal services as foreclosed homes become vacant and deteriorate.
The complaints set forth detailed examples of increased and costly services that the Plaintiffs have had to provide at specific Wells Fargo foreclosure properties. They describe and attach detailed declarations from former Wells Fargo employees explaining how the company has used discretion in pricing and financial incentives to encourage its employees to target African-American neighborhoods for deceptive, high priced loans that predictably result in unnecessary foreclosures. The complaints also includes a wealth of statistical evidence that reflects reverse redlining, including the fact that a Wells Fargo mortgage in an African-American neighborhood in Baltimore, Memphis, or Shelby County is several times as likely to go to foreclosure as a Wells Fargo mortgage in a white neighborhood.
The decisions denying Wells Fargo’s motions to dismiss make clear that local governments have a legal right under the Fair Housing Act to seek redress from lenders for reverse redlining practices that cause unnecessary foreclosures and vacancies in minority communities. Both cases are now proceeding to discovery.
Noteworthy Pleadings - Baltimore Case
- Baltimore complaint
- Order denying Wells Fargo's motion to dismiss the Baltimore complaint
- Declarations from former Wells Fargo employees filed in the Baltimore Case
Noteworthy Pleadings - Memphis Case
- Memphis/Shelby County complaint
- Order denying Wells Fargo's motion to dismiss the Memphis/Shelby County complaint
- Declarations from former Wells Fargo employees filed in the Memphis/Shelby County Case
To read press coverage of the case, click on the links below:
- “Judge Allows Redlining Suits to Proceed” The New York Times (May 5, 2011)
- “Memphis Accuses Wells Fargo of Discriminating Against Blacks” The New York Times (December 30, 2009)
- “Mortgage Lending Lawsuit Names Wells Fargo” Memphis Daily News (December 31, 2009)
- “House of Cards” The Memphis News (January 30-31 2010)