Top depositary mortgage lender Wells Fargo & Co. announced this week that it has committed $210 million to advance racial equity in homeownership in the United States, following a Bloomberg investigation that found the bank approved fewer than half of Black applicants for a home refinancing in 2020.
Kristy Fercho, CEO of Wells Fargo Home Lending, said in a statement that the initiative will help close the homeownership created by decades of systemic inequities, and the bank is “taking meaningful action by reimagining the homeownership journey.”
The Special Purpose Credit Program (SPCP) will identify eligible Black homeowners who could benefit from a refinance product. Then, the bank will commit $150 million to lower mortgage rates and refinancing costs. The bank will assess its progress and disclose it annually.
“Wells Fargo has long been a leader in lending to minority families,” said Fercho, who is Black.
But a new report from Bloomberg shows a persistent racial gap in the bank’s operations. Wells Fargo approved 58% of Black homeowners who completed applications for refinancing conventional home loans last year, according to 2021 Home Mortgage Disclosure Act data.
That is an improvement compared to the 47% rate in 2020. However, White homeowners had a much higher approval rate for refinancing in both years: 72% in 2020 and 79% in 2021.
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Wells Fargo’s approval rate for Black homeowners is the lowest of any major lender, according to Bloomberg’s analysis of the HMDA data. JPMorgan Chase & Co. approved 87% of Black applicants last year (93% of White applicants), Rocket Mortgage LLC approved 81% (88% of White ones), and Bank of America Corp. approved 75% (86% of White ones).
In a response to Bloomberg, Wells Fargo claimed it helped as many Black families purchase homes as the next three largest bank lenders combined over the last decade. Between 2017 and 2021, it reached $110 billion in refis for 425,000 Black and Hispanic families. Since 2019, the bank said it has allocated nearly $400 million to the housing affordability crisis in the country.
Wells Fargo, the 4th-largest U.S. mortgage lender by volume, originated $205 billion in 2021, down 7.6% compared to 2020. Refinancing originations reached $119 billion, up 58% year-over-year.
To broaden community outreach efforts, the bank is also expanding its partnerships with programs such as the National Urban League and UnidosUS.
Wells Fargo Foundation is also committing $60 million in grants to support 40,000 homeowners of color in eight markets through 2025. The Wealth Opportunities Restored through Homeownership (WORTH) will fund public-private partnerships to address the root causes of homeownership gaps.