Wells Fargo is still grappling with allegations of racial discrimination in its home lending practices, following a March report that the bank rejected more black mortgage refinance applicants than it accepted during the first year of the pandemic.
On Monday, lawyers and people involved in a class action lawsuit against the bank held a press conference accusing Wells of “racial redlining” and discrimination in mortgage lending. The bank has subjected black borrowers to a number of unfair practices, lawyers say, including higher mortgage interest rates, rejected refinance applications and abusive foreclosures.
READ: Senators call on feds to review Wells Fargo mortgage practices
“It seems the only common denominator was the color of the plaintiff’s skin,” said Benjamin Crump, one of the attorneys in the case. Crump has taken on a number of high-profile cases over the years, including representing the families of George Floyd and Breonna Taylor.
The bank called the allegations against it “unsubstantiated”.
“We are deeply disturbed by the allegations of discrimination which we believe do not withstand close scrutiny,” the bank said in a press release. “These baseless attacks on Wells Fargo stand in stark contrast to the company’s significant, long-term commitment to closing the minority homeownership gap.”
Wells Fargo is based in San Francisco but has its largest employment hub in Charlotte, with around 27,000 workers here.
The press conference was one of many concerns raised about the bank’s mortgage business, after a Bloomberg analysis last month showed Wells Fargo rejected more than half of black homeowners who applied to refinance their mortgage in 2020.
This gap has prevented many black borrowers from capitalizing on historically low mortgage rates during the pandemic and building equity that could have narrowed the racial wealth gap, the report said.
The bank did not dispute Bloomberg’s statistical findings, according to the report, and an internal review at Wells Fargo found “additional, legitimate, credit-related factors” were responsible for the differences.
Ten days after the report was released, 11 US senators called on federal authorities to review Wells Fargo’s mortgage refinancing processes.
More changes wanted at Wells Fargo
Wells Fargo’s alleged discriminatory practices are “killing black opportunity,” plaintiffs and class action attorneys said Monday. The lawsuit was filed in February in the Northern District of California and was updated on April 14.
Plaintiffs and attorneys also called on Wells Fargo shareholders to adopt a proposal presented by Service Employees International Union at the bank’s annual meeting of shareholders on Tuesday, April 26. She calls for an independent racial equity audit that would analyze Wells Fargo’s negative impacts on stakeholders. and communities of color.
In a proxy statement, the bank’s board recommended that shareholders vote against the proposal, highlighting existing diversity, equity and inclusion efforts that it said addressed union concerns. .
Wells Fargo under fire
The allegations are piling up to face the scrutiny the bank has already faced from lawmakers and regulators.
Wells Fargo still operates under a number of pending consent orders from various regulators linked to its 2016 scandal, when employees created millions of fake accounts for customers without their knowledge.
GO DEEPER: 5 years after its sales scandal, Wells Fargo still faces these federal restrictions
These restrictions include a $1.95 trillion Federal Reserve asset cap that prevents the bank from expanding its balance sheet.
On an earnings call last week, CEO Charlie Scharf told investors the bank had “a lot more work to do” to meet regulatory requirements. “We will likely have setbacks,” he said, “but I’m confident in our ability to continue closing the remaining gaps over the next few years.”
It’s also not the first time in recent years that the bank has come under the spotlight for its home loan business in particular.
In 2018, Wells apologized and admitted to refusing or failing to offer around 870 mortgage modifications between 2010 and April 2018. The mistake cost hundreds of borrowers their homes.
This story was originally published April 26, 2022 06:00.