Wells Fargo Rejected Half Its Black Applicants in Mortgage Refinancing Boom

[left-of-center2012]

Nationwide, only 47% of Black homeowners who completed a refinance application with Wells Fargo in 2020 were approved, compared with 72% of White homeowners, according to a Bloomberg News analysis of federal mortgage data. While Black applicants had lower approval rates than White ones at all major lenders, the data show, Wells Fargo had the biggest disparity and was alone in rejecting more Black homeowners than it accepted.

If, as expected, the Fed’s policy committee moves to hike interest rates at its March meeting, it will begin closing the door on a remarkable wealth event that has seen U.S. homeowners refinance almost $5 trillion in mortgages over the past two years, the most since the early 2000s. It’s one that allowed White homeowners to save an estimated $3.8 billion annually by refinancing their mortgages in 2020, according to researchers at the central bank. But it’s a door that barely opened for Black Americans, who make up 9% of all homeowners and locked in just $198 million a year, less than 4% of the savings.

Wells Fargo, which declined to comment about individual customers, didn’t dispute Bloomberg’s statistical findings. It says it treats all potential borrowers the same, is more selective than other lenders, and an internal review of the bank’s 2020 refinancing decisions confirmed that “additional, legitimate, credit-related factors” were responsible for the differences. But even when taking selectivity into account, the San Francisco-based bank had by far the worst record among major lenders when it came to refinancings by Black homeowners, according to Bloomberg’s analysis of Home Mortgage Disclosure Act data for 8 million completed applications to refinance conventional loans in 2020.

JPMorgan Chase & Co., the largest U.S. bank by assets, accepted 81% of refinancing applications from Black homeowners in 2020 compared with 90% from White ones. Bank of America Corp. approved 66% of its Black applicants and 78% of White ones. Rocket Mortgage LLC, which received 1 million refinancing applications in 2020, more than any other lender, had the smallest gap: It approved 79% of Black applicants and 86% of White ones.

https://www.bloomberg.com/graphics/2022-wells-fargo-black-home-loan-refinancing/?srnd=premium

[Desert grandma]

1. We refinanced through Credit Unions.

Forget banks. We own our home, have a rental house and own a 4 plex. We refinanced all 3 over the last 2 years at the lowest fixed rates ever. Banks could not come close, especially when taking into account closing costs. Our primary home is a VA loan at 2.79%, the non owner occupied rental and the 4 plex apartments are at 4%. Both of our daughters, single, working professionals, and women of color, also refinanced through credit unions at very low rates. It did, however, take some research to find those rates.

[exboyfil]

2. Are credit unions just as prevalent in majority black communities

as in white communities? That would be an interesting question to examine.

Also if the blacks have a significantly lower default rate than whites after being "redlined", then we have a problem. That is what was seen in some of the primary loan discrepancies. Of course it is much more serious when a black person doesn't pay back a loan than when a white person doesn't (sarcasm).

[Desert grandma]

3. Good question.

I think, however, that most people have the option to join at least one credit union. Some are specifically for former military or folks that worked in specific professions, and then others have no real requirements except maybe living in the state or county they are located in. I have found over the years that while banks can have the most stringent requirements, they sometimes have the worst customer service. We love credit unions, and in general, have found they have much better customer service.

[mitch96]

4. Wells Fargo just plain sucks. I needed a time sensitive Home loan. The jerked me around for

about a month and a half. They kept on lowering the loan amount to the point of being useless. Got a loan from an on line bank in two days..
When I closed my account they were shocked I tell you SHOCKED at the reason I left. They kept on calling and even sent me documentation on why they did what they did.
The people I talked to were in total denial of any problem...
Like I said...they truly suck. And don't get me going on their scheme to unknowingly sign people up for baking products they did not want or need ... It was illegal and they got nailed for it. They truly suck..
m