HUD Investigates Wells Fargo Over $60 Billion Effort To Boost Black Homeownership
By CU Today Staff —
WASHINGTON—The Department of Housing and Urban Development has launched an investigation into whether Wells Fargo violated federal fair-lending laws through mortgage programs designed to increase Black homeownership, raising questions about initiatives previously encouraged by federal regulators.
According to HUD and reporting by The Wall Street Journal, the investigation will examine whether the bank improperly offered mortgage products or terms based on borrowers' race.
The investigation centers on Wells Fargo's 2017 commitment to provide $60 billion in mortgage financing to help create at least 250,000 Black homeowners by 2027, along with a $210 million initiative announced in 2022 to advance racial equity in homeownership. That included $150 million to reduce mortgage rates and refinancing costs. According to HousingWire, HUD's Office of Special Investigations is examining the bank's special purpose credit programs and has directed Wells Fargo to preserve records related to its mortgage lending policies and practices.
In announcing the investigation, HUD Secretary Scott Turner said, “Even if Wells Fargo did not violate the law, its practice of dividing Americans based on race is immoral, unethical and un-American.”
The investigation has broader implications for banks and credit unions that have established special purpose credit programs to expand lending opportunities for underserved borrowers. In August, HUD, the NCUA and five other federal agencies rescinded 2022 interagency guidance that had encouraged such programs under the Equal Credit Opportunity Act and Regulation B, warning lenders against relying on the earlier guidance to justify race-based preferences.
Originally reported by CU Today.