The Department of Housing and Urban Development is probing Wells Fargo over fair-housing concerns, according to a new report.
The Department of Housing and Urban Development is probing Wells Fargo to determine whether its efforts to boost Black homeownership violate fair-housing laws.
HUD sent a letter to Wells Fargo CEO Charlie Scharf stating that it would examine whether the mortgage giant violated fair-lending laws with efforts to favor Black or minority homebuyers. The investigation will focus on the special purpose credit program it announced to promote homeownership after repeated criticism of its practices.
Under the Trump administration, HUD has refocused its enforcement of housing-discrimination laws. But it has also pushed to hamstring and stop so-called diversity, equity, and inclusion programs. Many of those were encouraged by Democrats and the Biden administration.
In a statement, HUD Secretary Scott Turner said the investigation was focused on "race-based decision making." The letter said Wells Fargo "fully embraced sorting homeowners—and offering different products or terms on those products—based on race."
“Even if Wells Fargo did not violate the law, its practice of dividing Americans based on race is immoral, unethical and un-American,” Turner said. “Wells Fargo and all of its employees that engaged in race-based decision-making should be ashamed of themselves.”
The Wall Street Journal first reported the letter. Wells Fargo declined to comment to Realtor.com®.
Wells Fargo undertook several of those efforts after repeated criticism from lawmakers and allegations of discrimination.
In 2012, it settled with the Justice Department for $175 million over allegations that it engaged in a pattern of discrimination against African American and Hispanic borrowers in mortgage lending from 2004 to 2008.
The bank subsequently announced a $125 billion lending commitment for Hispanic homebuyers in 2015. Then in 2017, it announced a $60 billion lending commitment to create 250,000 African American homeowners by 2027.
Wells Fargo collides with politics
Wells Fargo was again hit with a wave of criticism after a 2022 Bloomberg report that the mortgage giant rejected more than half of Black applicants.
That caused a firestorm of criticism from Democrats. Sen. Sherrod Brown (D-OH), then the chair of the Senate Committee on Banking, Housing, and Urban Affairs, sought a congressional investigation of the mortgage giant. New York City said it wouldn't open new accounts with Wells Fargo.
A San Fransisco judge finally ruled last year that Wells Fargo didn't need to face a class action lawsuit over those complaints.
Ultimately, the bank settled for $100 million in May and established a $100 million, three-year mortgage assistance borrowers program for communities with barriers to obtaining a mortgage. The bank denies the allegations in the suit, but settled to avoid continued cost and the disruption that would come with further litigation, according to court documents.
Now, the Trump administration says any kind "racialized home loan policy" violates the Fair Housing Act.
At a Mortgage Bankers Association meeting in Washington, DC, last week, HUD Assistant Secretary for Fair Housing and Equal Opportunity Craig Trainor said the agency is sticking to its mandate. He criticized the Biden administration for "social justice engineering that we expressly disavow."
"We do not convert enforcement tools into a mechanism for social justice change, social engineering, or outcomes-based enforcement," Trainor said, noting that HUD was investigating entities that it believed were doing so.
"We are using our statutory authority to launch many Secretary-initiated investigations where eligibility or priority for housing sources is premised upon race, national origin, color, or any of the other protected characteristics," Trainor said. "Civil rights do not run in one direction."