For the second time, a Baltimore federal judge has dismissed a lawsuit that city has filed against Wells Fargo.
It was dismissed again this week. Baltimore had accused the giant lender of targeting black borrowers for predatory loans. But the judge decided the city didn’t make clear enough the link between foreclosures, bad loans and the point of origination.
In other words, it may not be good enough to say a lender is originating loans at one interest rate for some borrowers and a higher interest rate for others – and to then chide that lender when the high interest rate borrowers go bust.
What if the borrower lost their job? What if they’re simply irresponsible? In that case, it might not have mattered if the lender had essentially given them free money – a mortgage to repay that had no interest rate.
That’s not to say what the city of Memphis is doing – suing Wells in partnership with the same lawyers who filed the Baltimore suit – might not turn out different.
The Baltimore suit seems to have turned out the way it did because of presentation.
There are still deeper issues at stake. One of which is the way the housing mania was fueled by sucking in borrowers who had no business owning a home, and shoving paperwork at them full of confusing legalese.
But Memphis and Shelby County attorneys will have to work hard to win the local case against Wells.
The lender already has made some shrewd moves in court filings. One example: Wells points to Memphis Mayor A C Wharton Jr.’s “City of Choice” initiative – an effort to reverse the city’s long battle with poverty and other woes – in an attempt to say “We didn’t break it.”
And that “the poverty and other effects the city claims are effects of foreclosure were really around long before we got here.”