Only 47% of Black homeowners who submitted home mortgage loan refinance applications in 2020 were approved by Wells Fargo as opposed to 72% of white homeowners, according to a Bloomberg News analysis
While home mortgage rates in the U.S. hit an all-time low during the pandemic, African American homeowners did not have the same level of access to refinance and ultimately lower their long term interest costs as other homeowners.
“Only 47% of the Black homeowners who submitted refinance applications in 2020 were approved by Wells Fargo as opposed to 72% of white homeowners”, according to a Bloomberg News.
Wells Fargo rejected more Black homeowners refinance applications than it accepted.
While Black applicants had lower approval rates than White applicants at all major lenders, the data show, Wells Fargo lagged behind other major lenders in their approval rates for minority applicants and had the biggest disparity and was alone in rejecting more Black homeowners than it accepted. Overall, 71% of Black refinancing applicants in the country were approved in 2020, according to Bloomberg’s analysis.
Wells Fargo, the third largest bank in the United States by assets, was the sole lender that rejected more Black applicants than it accepted. Black homeowners faced more refinancing denials than other minority applicants such as Hispanic homeowners and Asian homeowners,
This remarkable wealth event has seen U.S. homeowners refinance almost $5 trillion in mortgages over the past two years. This refinancing has allowed White homeowners to save an estimated $3.8 billion annually by refinancing their mortgages in 2020, according to researchers at the U.S Federal Reserve. 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.
While Black applicants had lower approval rates than White at all major lenders, Wells Fargo lagged behind other major lenders in their approval rates, had the biggest disparity and was alone in rejecting more Black homeowners than it accepted. https://t.co/oorrCqXWKv
— ELB (@ebrownl33) March 17, 2022
Bias in Wells Fargo’s approvals for refinancing home mortgage loans
Wells Fargo approved a greater share of applications from low-income White homeowners than all but the highest-income Black applicants, who had an approval rate about the same as White borrowers in the lowest-income bracket.
The U.S. Justice Department has censored banks for lending practices that tend to elevate costs for minority borrowers. After the 2008 housing crisis revealed discriminatory treatment, authorities unleashed a wave of penalties against U.S. lending giants. Wells Fargo agreed in 2012 to pay more than $184 million to settle federal claims that it unfairly steered Black and Hispanic homeowners into subprime mortgages and charged them higher fees and interest rates.
References:
- https://www.bloomberg.com/graphics/2022-wells-fargo-black-home-loan-refinancing/
- https://www.msn.com/en-us/money/news/wells-fargo-rejected-nearly-half-of-their-black-homeowners-refinancing-applications/ar-AAVa7tL