March 17, 2022
By Pete Schroeder
WASHINGTON (Reuters) – U.S. Senate Banking Committee Chairman Sherrod Brown and other Senate Democrats have asked government regulators to examine Wells Fargo’s refinancing policies to ensure they are not discriminatory.
In letters sent to the Department of Housing and Urban Development and the Consumer Financial Protection Bureau, the lawmakers said the government should ensure Wells Fargo is complying with fair lending laws after a recent analysis found the bank approved less than half of mortgage refinancing applications from Black borrowers while signing off on 72% of such requests from white applicants.
“The stark racial disparity in refinance approval rates at Wells Fargo raises questions about whether its mortgage systems and processes comply with all federal fair housing and fair lending laws and regulations,” the group, which included influential Senators Dick Durbin and Elizabeth Warren, wrote.
They also noted that with the Federal Reserve beginning to raise interest rates for the first time since 2018, borrowers denied refinancing may have missed out on an opportunity to take advantage of record-low mortgages rates, leading to higher costs that could span decades.
The letter comes after a Bloomberg analysis found that Wells Fargo lagged its counterparts in approving refinancing applications from minority borrowers, approving less than half of all refinancing applications from Black borrowers and just 53% of Hispanic applicants in 2020. All other lenders approved Black and Hispanic applicants at a 71% and 79% rate, respectively, according to Bloomberg’s analysis.
A Wells Fargo spokesperson did not immediately respond to a request for comment on the letter, but the bank previously told Bloomberg its own internal review determined the discrepancy was due to additional credit factors.
(Reporting by Pete Schroeder; Editing by Alexandra Hudson)