As foreclosures continue to mount in Baltimore City, officials said Thursday that more lawsuits against mortgage lenders may be in the offing.

“We become aware through our research of other lenders engaging in practices that may be actionable,” said City Solicitor George Nilson.

“There are other lenders that we may be filing lawsuits against.”

Nilson said future lawsuits would be similar to the city’s lawsuit against Wells Fargo Bank.

This story continues below
Advertisement

“It will be the same with a twist,” he said, declining to provide further details.

City officials filed a lawsuit in federal court on Jan. 7, claiming mortgage lender Wells Fargo engaged in a practice called “reverse redlining,” where neighborhoods of predominantly minority homeowners are targeted with high-price loans.

Attorneys for the city attribute to this practice a foreclosure rate four times higher for Wells Fargo mortgages in predominantly black neighborhoods than majority white neighborhoods.

Nilson revealed the city’s plans Wednesday evening as Mayor Sheila Dixon held a Mayor’s Night In at City Hall to help beleaguered homeowners stave off foreclosure.

Dixon reiterated her concerns that predatory lenders contributed to the rash of foreclosures plaguing the city; counselors and mortgage experts answered questions from anxious city residents.

“It is affecting the city financially and damaging the stability of our neighborhoods,” Dixon said of the increase in foreclosures.

A recently issued report on the foreclosure rate in jurisdictions throughout Maryland showed Baltimore City had 3,349 mortgages enter arrears in 2007 — an 793 percent increase from 2006.

The sagging real estate market is costing Baltimore City millions in lost tax revenues, according to preliminary estimates.

Halfway through the current fiscal year, budget analysts are predicting a $20 million to $30 million shortfall in receipts from recordation and transfer taxes — revenues that played a key role in past city surpluses when the real estate market was booming.

“Best-case scenario is 20 percent off; the worst case is 30 percent,” Councilman Robert Curran, a member of the city budget committee, has said.

Dixon has instituted a hiring freeze, and City Comptroller Joan Pratt has predicted that Baltimore will have to trim expenses in the near future.

“There will be cuts in the next budget,” Pratt said.

sjanis@baltimoreexaminer.com