Wells Fargo's discriminatory lending practices resulted in extraordinarily high rates of foreclosure in minority neighborhoods in Baltimore, Memphis, and Shelby County, Tennessee. These foreclosures caused the Cities and County to lose property tax revenues and to spend additional funds for critical municipal services as foreclosed homes become vacant and deteriorate.
Relman, Dane and Colfax represented these local governments in landmark fair lending suits against Wells Fargo under the Fair Housing Act in the U.S. District Court for the District of Maryland and the U.S. District Court for the Western District of Tennessee. On July 12, 2012, the City of Baltimore resolved its landmark fair lending lawsuit against Wells Fargo. Resolution of the suit was announced concurrently with an announcement by the United States Department of Justice that it has reached a national fair lending settlement with Wells Fargo worth at least $175 million.
During the course of the litigation, Baltimore obtained a landmark ruling upholding the right of a municipality to sue under the Fair Housing Act. Under its agreement with the City, Wells Fargo will provide $4.5 million in direct down payment assistance to qualifying Baltimore homebuyers. Wells Fargo will provide an additional $3 million for the City to use for priority housing and foreclosure-related initiatives. As part of the agreement, Wells Fargo has also committed to making $425 million in prime mortgage loans in Baltimore over the next five years, $125 million of which will be in low and moderate income neighborhoods.
Baltimore will also participate in the Justice Department's national settlement. Under that settlement, Wells Fargo will pay at least $125 million in compensation to minority borrowers who were overcharged or steered into subprime loans, including borrowers located in Baltimore City. More than 1,000 Baltimore borrowers are expected to receive compensation. According to the Justice Department, awards are expected to average $15,000 for each borrower improperly steered into a subprime loan. Wells Fargo will pay an additional $50 million for down payment assistance to borrowers in eight metropolitan areas, including Baltimore.