December 20th 2023.
Wells Fargo is once again being accused of racial discrimination. This time, the Consumer Financial Protection Bureau (CFPB) is conducting an industry-wide investigation into how the bank's mortgage bankers used loan discounts last year.
Discounts, also known as pricing exemptions, are given by mortgage personnel to secure deals in competitive markets. According to CNBC, Wells Fargo can request exemptions that can lower a customer's annual percentage rate by 25 to 75 points. This practice has been around for decades, and CFPB found that Wells Fargo and other banks were violating U.S. fair lending laws by giving fewer pricing exceptions to Black and female borrowers.
Ken Perry, founder of a Washington-based compliance firm for the mortgage industry, told CNBC, “As long as pricing exceptions exist, pricing disparities exist. They’re the easiest way to discriminate against a client.” Wells Fargo has been given a Matter Requiring Attention notice, but it is unclear if CFPB regulators are accusing the bank of discrimination or just bad practices.
The bank has been in hot water before. Last year, New York City Mayor Eric Adams ended the city's relationship with the bank due to its "persisting track record of discrimination." Wells Fargo was also accused of staging fake job interviews for Black and female candidates, and several Black homeowners filed a class-action racial discrimination lawsuit against the bank.
Tom Goyda, Wells Fargo's senior vice president of consumer lending communications, responded with 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. 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.”
Wells Fargo was once a major player in the U.S. mortgage industry, but its business has been shrinking due to increased scrutiny and the payment of billions in penalties and fines. It remains to be seen if the CFPB will take legal action and if Wells Fargo will be found guilty of racial discrimination.
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