VOL. 123 | NO. 219 | Friday, November 07, 2008
City, County May Sue Predatory Lenders
By Andy Meek
Government leaders are discussing the possibility of taking legal action against mortgage companies they say have contributed to abusive loans in local communities.
Shelby County mayor A C Wharton Jr. and Memphis mayor Willie Herenton, as well as attorneys for the city and county, have participated in some of the discussions.
Tennessee Attorney General Bob Cooper recently talked to Wharton and came to Memphis about two months ago for a discussion with representatives of Memphis Area Legal Services.
MALS representatives plan to talk with members of the attorney general’s office in another week or so.
Whatever legal action emerges would mirror lawsuits filed in cities such as Baltimore, which in January brought a federal suit against Wells Fargo Bank NA over allegations of predatory lending. The Baltimore court case centers on the claim that Wells Fargo engaged in reverse redlining, an illegal practice that involves targeting minority neighborhoods for high-cost loans.
“That would be a similar focus here,” said Webb Brewer, director of MALS. “I think there’s quite a bit of data that would support that there’s reverse redlining that’s gone on over the last few years in Memphis and Shelby County.”
‘A good thing to do’
Data are being studied to determine which companies have been most prolific in making high-cost loans ending in local foreclosures.
No one involved in the city and county discussions was willing to identify at this point which lending companies likely would be part of any lawsuit, but one person involved in the effort said data related to Countrywide Financial, Ameriquest, Bank of America and Wachovia Bank, among others, are being scrutinized.
Emily Trenholm, head of the Community Development Council of Greater Memphis, said Wharton discussed the idea of pursuing some kind of legal action against abusive lenders in his remarks at a community forum last week. The forum had been convened to discuss the implications of the rise in local foreclosures.
“He mentioned it was something they were working on. I didn’t talk to Mayor Wharton about it, but I don’t think he would have mentioned it in that venue if he wasn’t serious about it,” she said. “Obviously, we would be in favor of that (idea).”
Brewer said the idea is still taking shape and that a final game plan would need approval from multiple levels of local government.
“It would have to go before both the County Commission and the City Council, but I think there are a lot of people thinking that this would be a good thing to do,” Brewer said.