Wells Fargo is being accused of racial discrimination yet again, this time concerning an industrywide probe into mortgage bankers’ use of loan discounts last year.
CNBC reports
that discounts, also known as pricing exemptions, are used by mortgage personnel to secure deals in competitive markets. For example, bankers at Wells Fargo can request pricing exemptions that can lower a customer’s annual percentage rate (APR) between 25 and 75 points, according to the article.This practice has been used for decades in the home loan industry and, as a result, has triggered an investigation by the Consumer Financial Protection Bureau (CFPB
), which found Wells Fargo and other banks violated U.S. fair lending laws by giving Black and female borrowers fewer pricing exceptions than other customers.“As long as pricing exceptions exist, pricing disparities exist,” Ken Perry, founder of a Washington-based compliance firm for the mortgage industry, told CNBC. “They’re the easiest way to discriminate against a client.”
Wells Fargo received a Matter Requiring Attention (MRA) notice regarding its discounts, although it is unknown if CFPB regulators are accusing the bank of discrimination or simply bad practices, the outlet reports.
Wells Fargo has been accused of discrimination in the past. Last year, New York City Mayor Eric Adams discontinued the city government’s relationship with the bank over its “persisting track record of discrimination.”
Last year, the bank was also accused of staging fake job interviews for Black and female candidates, and several Black homeowners have filed a class-action racial discrimination lawsuit against the bank.
The bank was one of the biggest players when it came to mortgages in the U.S., according to the outlet. However, it has downsized
its mortgage business throughout 2023 due to increased scrutiny and paying billions in penalties and fines.Tom Goyda, Wells Fargo’s senior vice president of consumer lending communications, responded to the investigation in an emailed statement to BLACK ENTERPRISE.
“While we cannot comment on any regulatory matters, we don’t discriminate based on race, gender or age or any other protected basis,” Goyda said. “Wells Fargo is proud to be the largest bank lender to minority families. Like many in the industry, we take into consideration competitor pricing offers when working with our customers to get a mortgage. As part of our renewed focus on supporting underserved communities through our Special Purpose Credit Program, we have spent more than $100 million over the last year to help more minority families achieve and sustain homeownership, including offering deep discounts on mortgage rates.”
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