FAMU should reevaluate its banking relationship with Wells Fargo

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Mortgage rates hit an all-time low during the pandemic, giving homeowners the chance to refinance and ultimately lower their long term interest costs. However, not everyone had the same level of access to this once in a lifetime opportunity. 

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 analysis published on Mar. 11. 

To be clear, white applicants had higher approval rates at all major lenders, however, Wells Fargo lagged behind other major lenders in their approval rates for minority applicants. 

Overall, 71% of Black refinancing applicants in the country were approved in 2020, according the Bloomberg 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. 

At Wells Fargo, Black homeowners faced more refinancing denials than other minority applicants such as Hispanic homeowners and Asian homeowners, who had approval rates from Well Fargo at 53% and 67% respectively. 

Paul Turner, the senior vice president of Consumer Lending Executive Communications at Wells Fargo, disputes Bloomberg's conclusions and suggested that Bloomberg's data "relied on an analysis designed to present a skewed picture of our lending efforts," and ignored the bank's "strong track record of lending to Black homeowners."

JPMorgan Chase accepted 81% of refinancing applications from Black homeowners in 2020 compared with 90% from white ones. Bank of America approved 66% of its Black applicants and 78% of white ones. Rocket Mortgage LLC, approved 79% of Black applicants and 86% of white ones. While most lenders displayed about a ten percent difference in approval rates between white and Black households, Wells Fargo rejected 24% more Black applicants than white ones, according to the Bloomberg data.

 
Wealthy Black Wells Fargo applicants still have poor approval odds 
Wells Fargo’s application approval rates for the lowest income white families—earning a maximum of $63,000 per year—were nearly identical to high income Black families—earning  a minimum of $168,000 per year. But when Black and white families had the same low income status of a $63,000 maximum annual income, white families were almost twice as likely to be approved.

This isn’t Wells Fargo’s first time being accused of discrimination
In 2012, Wells Fargo settled US Department of Justice lawsuit by agreeing to pay $175 million after it was discovered that outside brokers selling the company's mortgages were discriminating against Black and Hispanic borrowers between 2004 and 2009.  The government probe found 34,000 cases in which the bank charged black and Hispanic customers higher fees and rates than white customers with similar credit profiles. 
 
And it 2020, Wells Fargo agreed to pay $7.8 million to settle a US Department of Labor lawsuit alleging it discriminated in hiring women and Black workers at its bank locations across the country.  

Also, in 2020, the then CEO of Wells Fargo had to apologized for blaming the lack of Black employees at the bank on a “limited” talent pool during a congressional hearing.

FAMU and Wells Fargo have had a banking relationship for over 15 years, the mega bank is the university's official banking partner and operates the Rattler Card program.

Note:  this article first appeared on Rattler Nation on March 17, 2022, given recent events we thought it was worth highlighting this again.