Wells Fargo & Co said on Friday it is in talks with Baltimore officials that could avert further litigation by that city over the bank's mortgage lending practices.

Baltimore sued the fourth-largest U.S. bank in January 2008, accusing it of steering minority borrowers to expensive home loans, resulting in economic harm to the city.

U.S. District Judge J. Frederick Motz in January dismissed that complaint, but gave the city permission to file a narrower lawsuit focused on specific houses or neighborhoods where damages might be traceable to specific Wells Fargo practices.

Motz on Friday granted a request made by Wells Fargo a day earlier to extend the city's deadline to file an amended complaint to April 9 from March 12, court records show.

We're talking with the city about ways we can collaborate on constructive alternatives to litigation, said Teri Schrettenbrunner, a spokeswoman for the bank.

The city solicitor for Baltimore did not immediately return a request for comment.

When it sued Wells Fargo, Baltimore became the first major American city to accuse a mortgage lender of violating the federal Fair Housing Act with predatory lending practices that exacerbated the nation's housing slump.

Motz, however, rejected as not plausible the city's effort to link Wells Fargo's practices to lower property tax revenue, rising foreclosures and home vacancies, increased criminal activity, and higher police and fire costs.

Based in San Francisco, Wells Fargo still faces a Memphis, Tennessee, lawsuit alleging Fair Housing Act violations. It was also sued by Illinois for alleged state law violations.

Wells Fargo shares rose 12 cents to $29.88 in afternoon trading on the New York Stock Exchange.

The Baltimore case is Mayor & City Council of Baltimore v. Wells Fargo Bank NA, U.S. District Court, District of Maryland, No. 08-00062.

(Reporting by Jonathan Stempel; Editing by John Wallace. Steve Orlofsky, Dave Zimmerman)

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