U.S. Senate Democrats seek probe of Wells Fargo’s refinancing practices

Wells Fargo Financial institution department is seen in New York Metropolis, U.S., March 17, 2020. REUTERS/Jeenah Moon

WASHINGTON, March 17 (Reuters) – U.S. Senate Banking Committee Chairman Sherrod Brown and different Senate Democrats have requested authorities regulators to look at Wells Fargo’s mortgage refinancing insurance policies to make sure they don’t discriminate towards minority debtors.

In letters to the Division of Housing and City Improvement and the Client Monetary Safety Bureau, the lawmakers mentioned the federal government ought to guarantee Wells Fargo is complying with truthful lending legal guidelines after a latest evaluation discovered the financial institution accepted lower than half of mortgage refinancing functions from Black debtors, whereas signing off on 72% of such requests from white candidates.

“The stark racial disparity in refinance approval charges at Wells Fargo raises questions on whether or not its mortgage programs and processes adjust to all federal truthful housing and truthful lending legal guidelines and laws,” the group, which included influential Senators Dick Durbin and Elizabeth Warren, wrote.

The lawmakers mentioned debtors denied refinancing might have missed out on a possibility to reap the benefits of record-low mortgage charges, resulting in larger prices that might span many years, now that the Federal Reserve has begun to lift rates of interest for the primary time since 2018.

The letter references a Bloomberg Information evaluation that discovered Wells Fargo lagged its counterparts in approving refinancing functions from minority debtors.

Along with discovering that the financial institution accepted lower than half of all refinancing functions from Black debtors, the evaluation discovered that simply 53% of Hispanic candidates had been accepted in 2020. The typical approval fee amongst all different lenders for Black and Hispanic candidates got here in at 71% and 79%, respectively, in line with Bloomberg’s evaluation.

A Wells Fargo spokesperson mentioned in response to the letter that the financial institution complies with the regulation and works carefully with regulators on “our shared aim of lowering the homeownership hole.” The financial institution beforehand informed Bloomberg its personal inside assessment decided the discrepancy was because of further credit score components.

Reporting by Pete Schroeder
Modifying by Alexandra Hudson, Tim Ahmann and Jonathan Oatis

: The Thomson Reuters Trust Principles.