Federal Probe Challenges Race-Based Mortgage Programs at Major Lender
The Department of Housing and Urban Development opened an investigation into Wells Fargo’s programs designed to increase Black homeownership, questioning whether the bank violated fair-lending laws by offering products or terms based on race. HUD sent a letter to CEO Charlie Scharf on Wednesday stating the agency would examine whether the bank engaged in illegal “sorting” of homeowners. Secretary Scott Turner said HUD is reviewing similar initiatives at other banks.
Wells Fargo committed $60 billion in 2017 to help add 250,000 Black homeowners by 2027, then expanded the program in 2022 to refinance minority homes using its own capital. The bank scaled back its mortgage business broadly in early 2023 but maintained its racial equity pledge. By late 2023, Wells Fargo had achieved about 40 percent of its initial lending commitment and refinanced roughly 5,100 customers with average monthly savings of $100. The bank has since removed its 2023 racial-equity assessment from its website.
The investigation reflects a broader shift in how the administration views programs launched or expanded after 2020, when companies responded to social unrest and investor pressure. IBM and Deloitte paid multimillion-dollar fines last year to settle claims they defrauded the government by considering diversity in hiring and promotion decisions. Black homeownership stood at 46 percent in 2024, compared with 73 percent for white households, according to Pew Research Center.
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