In 2020, Wells Fargo rejected nearly half its Black applicants for a mortgage refinance
One of the country’s biggest mortgage providers turned down nearly half of the refinance applications sent in by Black homeowners while approving almost three-quarters of those sent in by white applicants in 2020.
According to a Bloomberg News analysis, Wells Fargo fell well below industry averages when it came to lowering interest rates through a home refinance to African-Americans, who were approved 71 percent of the time by all other lenders. Wells Fargo’s 47 percent approval rate gave it the worst record among major lenders when considering refinancings for Black homeowners.
Sifting through the information made available via the Home Mortgage Disclosure Act, which included data for 8 million completed applications to refinance conventional loans in 2020, Bloomberg found Wells Fargo was more sparing when it came to approving refinances overall: it okayed 72 percent of requests from white homeowners vs. an 87 percent approval by all other lenders; 67 percent to Asian lenders vs. 85 percent; and 53 percent to Hispanic lenders vs. 79 percent.
Wells Fargo didn’t dispute the numbers, according to the report, with the San Francisco bank claiming it treats all of its potential customers the same, has a more selective process for approving loans and that “additional, legitimate, credit-related factors” were responsible for the differences in numbers.
Experts say the refinancing gap makes it more difficult for Black families to use their real estate holdings to build wealth. Andre Perry, a senior fellow at the Brookings Institution, told the news site not getting approval to refinance means Black homeowners have fewer resources to invest in their children, start businesses, renovate their homes, or buy additional homes. Perry’s 2018 study found that the average Black home was valued at $48,000 less than its white equivalent — a differential that amounts to $156 billion in missing Black wealth, according to the report.
In the past, the U.S. Justice Department has gone after banks for lending practices that can raise expenses for minority borrowers. Authorities leveled penalties against U.S. lending giants after studies into the 2008 housing crisis suggested there had been discriminatory treatment. In 2012, Wells Fargo agreed to pay more than $184 million to settle federal claims that it charged Black and Hispanic homeowners higher fees and interest rates after unfairly steering them into subprime mortgages. The bank didn’t admit to any nefarious business practices and said it treated all customers fairly.
In March of 2017, Wells Fargo agreed to pay $110 million to settle a national class-action lawsuit that claimed its employees opened more than 2 million deposit and credit-card accounts without customers’ permission since 2011, according to published reports.
[Bloomberg News] — Vince DiMiceli