CHARLOTTE, N.C. — Several democratic members on the U.S. Senate Committee on Banking, Housing, and Urban Affairs requested a federal review of Wells Fargo’s mortgage loan refinance processes this week “amid concerns and recent reporting that suggest Black and Hispanic borrowers were less likely to be approved for refinancing loans in 2020 as interest rates hit record lows.”
The majority members were led by democrat and committee Chairman Sen. Sherrod Brown of Ohio who sent a letter to the Department of Housing & Urban Development and the Consumer Financial Protection Bureau to ensure Wells Fargo is in compliance with the Fair Housing Act and the Equal Credit Opportunity Act.
The letter revealed approval rates of 70% for Black applications and 78% for Hispanic applications for refinance mortgage loans across all lenders in 2020, compared to roughly 87% for non-Hispanic white applications. The senators cited a recent Bloomberg analysis (made with data from Home Mortgage Disclosure Act (HMDA)) that found Wells Fargo approved just 47% of Black refinance applicants and 53% of Hispanic refinance applicants compared to 72% of white applicants.
"We will review the letter and provide our perspective on the analysis reflected in the recent story, which ignored critical information about Wells Fargo's lending to Black homeowners and the full range of our efforts to help meet the homeownership needs of diverse customers," Wells Fargo told WCNC Charlotte in a statement Friday. "We are confident that our underwriting practices are consistently applied regardless of the customer's race or ethnicity. Our analysis shows that additional, legitimate, credit-related factors that are not available in HMDA data were responsible for the differences in our refinance approval rate for Black homeowners."
In the statement, Wells Fargo defended their operations.
"The fact is, Wells Fargo helped more Black homeowners refinance their mortgages in 2020 than any of the other largest bank lenders and the 83% increase in our refinance loans to Black homeowners in 2020 compared with 2019 was by far the biggest gain among those banks," the statement continued. "In 2021, we increased that total by 88%. What's more, over the most recent decade (2011 – 2020), Wells Fargo helped as many Black families purchase homes as the next three largest bank lenders combined."
A WCNC Charlotte analysis of federal home loan data previously revealed the largest lenders in Charlotte have denied Black applicants two-to-three times more often than white applicants.
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Federal records showed Wells Fargo originated among the largest number of home loans in 2018 and 2019 in the Charlotte market. They originated more than 10,100 loans with 721, or 7.1%, of those loans awarded to Black applicants. HMDA data show Wells Fargo denied Black applicants twice as much as their white counterparts during those years in the Charlotte market. The bank's two-year denial disparity rate was higher than the market average.
