US Senate Democrats Seek Investigation into Wells Fargo’s Refinancing Practices

© Reuters. Wells Fargo Bank branch on display in New York City, US, March 17, 2020. REUTERS/Jeenah Moon

By Pete Schroeder

WASHINGTON (Reuters) – Senate Banking Committee chair Sherrod Brown and other Senate Democrats have asked government regulators to investigate Wells Fargo (NYSE:)’s mortgage refinancing policy to ensure minority borrowers are not discriminated against.

In letters to the Department of Housing and Urban Development and the Consumer Financial Protection Bureau, lawmakers said the government must ensure Wells Fargo adheres to fair loan laws, after a recent analysis found that the bank has cut less than half of its mortgage refinancing applications. of black borrowers. , while turning down 72% of such requests from white applicants.

“The stark racial disparity in refinancing approval rates at Wells Fargo raises questions about whether mortgage systems and processes comply with all federal laws and regulations governing fair housing and fair lending,” wrote the group, which includes influential Senators Dick Durbin. and Elizabeth Warren.

Lawmakers said borrowers who declined refinancing may have missed an opportunity to take advantage of record-low mortgage rates, leading to higher costs that could last for decades as the Federal Reserve has begun raising for the first time since 2018 of the interest rates.

The letter references an analysis by Bloomberg News that found Wells Fargo lagged behind its counterparts in approving refinancing applications from minority borrowers.

In addition to finding that the bank approved less than half of all black borrower refinancing applications, the analysis found that only 53% of Hispanic applicants were approved in 2020. The average approval rate of all other lenders for black and Hispanic applicants was 71% and 79% respectively, according to Bloomberg’s analysis.

A spokesperson for Wells Fargo said in response to the letter that the bank is abiding by the law and working closely with regulators on “our common goal of narrowing the homeownership gap”. The bank previously told Bloomberg that its own internal assessment had determined the discrepancy was due to additional credit factors.

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