Warren, Wyden Demand Answers About Wells Fargo's Discriminatory Mortgage-Refinancing Practices Against Black Homeowners
In 2020, Wells Fargo Accepted Less than Half of Mortgage-Refinancing Applications from Black Applicants; Approval Rate for White Applicants Was 25 Percentage Points Higher Than Rate for Black Applicants
Washington, D.C. – United States Senator Elizabeth Warren (D-Mass.), a member of the Senate Banking, Housing, and Urban Affairs Committee, and Senator Ron Wyden (D-Ore.), Chair of the Senate Finance Committee, sent a letter to Charles Scharf, CEO and President of Wells Fargo, demanding answers from the bank after a Bloomberg report found that in 2020, Wells Fargo was the only major lender in the United States to accept less than half of mortgage-refinancing applications from Black homeowners. Wells Fargo’s acceptance rate for White homeowners was 25 percentage points higher than for Black homeowners.
“This shocking disparity—layered upon Wells Fargo’s long history of scamming and mistreating consumers of color—is unacceptable. Given these alarming revelations, we demand that Wells Fargo provide answers to our questions and additional information regarding its mortgage-refinancing practices and its potentially illegal discrimination against Black homeowners.” wrote the senators.
Mortgage refinancing is a critical tool for homeowners to build wealth, especially for communities of color who have historically faced unequal access to homeownership. But in the past two years, Black homeowners have been systematically shut out from a historic period of low-interest-rate refinancing, called a “remarkable wealth event.” Of the $5.3 billion in refinancing savings that homeowners acquired through October 2020, Black homeowners saved less than $200 million, or 3.7% of total savings.
Bloomberg’s report found that Wells Fargo was one of the worst perpetrators of inequities in mortgage refinancing. In 2020, Wells Fargo was the only major lender to reject more Black homeowners applying for mortgage refinancing than it accepted, and it had the largest racial disparity for approving Black applicants compared to White applicants: Wells Fargo approved 47% of Black applicants and 72% of White applicants – a 25 percentage-point gap. Additionally, Wells Fargo was the only major lender to have its approval rate for Black applicants decline in the last decade – Wells Fargo’s rate dropped from 53% to 47%, while rates at other lenders increased from 53% to 71%.
The senators noted Wells Fargo’s history of scamming and mistreating consumers, and in particular, consumers of color, including a $184 million settlement in 2012 with the Department of Justice over allegations that the bank engaged in a “pattern or practice of discrimination against qualified African-American and Hispanic borrowers in its mortgage lending” by steering borrowers to subprime mortgages because of their race or national origin.
Given these deeply troubling figures and Wells Fargo’s history of mistreating consumers, the senators demanded that Wells Fargo provide information about their data and algorithms, analyses and action plans, and internal and external communications about their mortgage-refinancing program and low approval rates for Black homeowners by March 28, 2022.
Senator Warren has fought to hold Wells Fargo accountable for cheating and mistreating consumers for years and is a leader in protecting consumers from predatory practices from huge financial institutions.
- In February 2022, Senator Warren and Representative Katie Porter (D-Calif.) sent a letter to the Financial Industry Regulatory Authority (FINRA) questioning new reports of misbehavior by Wells Fargo that raise concerns about FINRA’s ability to fairly and effectively police the financial system after allegations arose that Wells Fargo, with the permission of FINRA, rigged the arbitration process by manipulating a list of arbitrators in a case in which the bank was alleged to have mishandled a customer’s investments.
- In September 2021, Senator Warren called on the Federal Reserve to revoke Wells Fargo’s status as a financial holding company and require the company to separate its traditional banking activities from its nonbanking activities due to its ongoing failure to meet regulatory requirements.
- In May 2021, Senator Warren called out the CEOs of four of the nation's largest banks — JPMorgan, Wells Fargo & Co, Citi, and Bank of America — for taking a collective $4 billion in overdraft fees from struggling consumers during the pandemic and called on them to immediately refund these fees.
- In September 2020, Senator Warren sent a letter to Federal Reserve Chair Jerome Powell, sharing new and previously unreleased information regarding recent reports that Wells Fargo placed non-delinquent mortgage borrowers into forbearance without their consent, potentially putting them at risk of greater financial hardship during the pandemic.
- In July 2020, Senator Warren and Senator Brian Schatz (D-Hawaii) sent a letter to Wells Fargo about its ability to comply with the law following reports about the bank placing borrowers who are not delinquent on their loans in mortgage forbearance programs without their consent and putting consumers at risk of greater financial hardship.
- In August 2019, Senator Warren sent letters to then-Consumer Financial Protection Bureau (CFPB) Director Kathy Kraninger, then-Securities and Exchange Commission (SEC) Chairman Jay Clayton, and then-Comptroller of the Currency Joseph Otting, expressing concern that Wells Fargo executives may have once again intentionally misled investors, this time about the strength of their customer base.
- In August 2019, Senator Warren sent a letter to Wells Fargo requesting information about a new report that the bank kept accounts active for months after they had been closed by customers and charged customers hundreds or even thousands of dollars in overdraft fees for charges made against these “closed” accounts.
- In April 2019, Senator Warren wrote to Joseph Otting, former Comptroller of the Currency, requesting information about the role that the OCC will play in the selection of a new CEO and President of Wells Fargo.
- In April 2019, Senator Warren and then-Senate Banking Committee Ranking Member Sherrod Brown (D-Ohio) released new letters from the Fed, the OCC, and CFPB in response to inquiries that they sent the regulators in March 2019. The regulators told the senators that Wells Fargo has not satisfied its obligations under existing consent orders, which require the bank to remediate customers harmed by its wrongdoing and impose reforms to end Wells Fargo's unlawful activity.
- In February 2019, Senator Warren urged Chair Powell not to lift growth cap restrictions on Wells Fargo until Tim Sloan was removed from his role as CEO, citing a report revealing that, beginning in 2016, Wells Fargo employees "routinely falsified clients' signatures and otherwise doctored paperwork" in order to comply with a legal settlement with the OCC related to violations of anti-money laundering laws.
- On March 22, 2019, Senator Warren called on the OCC and the CFPB to fire Wells Fargo CEO Tim Sloan and renewed her call for action by the Federal Reserve. On March 28, 2019, Tim Sloan announced that he was stepping down as Wells Fargo CEO.
- In January, 2019, Senator Warren questioned Wells Fargo CEO Sloan on excessively high fees Wells Fargo charged college students.
- On April 4, 2019, Wells Fargo announced it had eliminated some of these fees associated with campus debit cards.
- In March and April 2018, Senator Warren urged Federal Reserve Chair Powell to hold a public vote by the Federal Reserve Board on lifting growth restrictions for Wells Fargo instead of delegating it to staff. She also asked for the public release of the third-party review of how Wells Fargo is implementing reforms.
- In a response to Senator Warren on May 10, 2018, Chair Powell reconsidered and announced he would require a Federal Reserve Board vote on whether to lift Wells Fargo's growth restrictions and said he would consider releasing as much of the third-party review as possible.
- In June 2017, Senator Warren sent a letter to then-Fed Chair Janet Yellen urging the Federal Reserve to remove 12 Wells Fargo board members following the fake accounts scandal.
- At a Senate Banking Committee hearing on July 13, 2017, Senator Warren again called on Chair Yellen to remove implicated Wells Fargo board members.
- Later in July 2017, Senator Warren renewed her call for the Fed to remove Wells Fargo board members after it was reported that more than 800,000 Wells Fargo customers were charged for auto insurance they did not need.
- On August 16, 2017, Senator Warren again called for the removal of Wells Fargo board members amid new evidence that the bank failed to refund money owed to car loan customers, overcharged small businesses for credit card transactions, and billed certain mortgage customers for unexpected, optional services.
- On February 2, 2018, Chair Yellen announced in response to Senator Warren that the Federal Reserve would freeze the growth of Wells Fargo and push out four of the board members responsible.
- In September 2016, Senator Warren called on former Wells Fargo CEO and Chairman John Stumpf to resign for his role in the fake accounts scandal. Mr. Stumpf resigned on October 12, 2016.
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