Wells Fargo Accused of “Modern-Day Redlining"

4/20/2022 - Written by S.J.

Wells Fargo, one of the largest mortgage lenders in the US, is battling discrimination accusations stemming from racially biased lending practices. Last month the financial institution was accused of “modern-day redlining” after data showed it had rejected the refinance applications of Black homeowners at a much higher rate than those of white homeowners. The report, along with a number of new individual lawsuits, has since garnered the attention of high-profile legal experts and it appears Wells Fargo may soon face a class action lawsuit.

According to federal housing data analyzed by Bloomberg, in 2020 Black homeowners who applied for refinancing with Wells Fargo were approved at a rate of 47%. White homeowners, on the other hand, were approved 72% of the time. The analysis showed that other lenders approved Black homeowners 71% of the time, compared to Wells Fargo’s 47%. It is worth noting that Wells Fargo also approved Asian and Latinx applicants at significantly lower rates than white applicants, 67% and 53% respectively.

Moreover, documentation in a lawsuit filed against Wells Fargo, Braxton v. Wells Fargo, 22-cv-1748, U.S. District Court, Northern District of California, points out that “[w]hite refinancing applicants earning between $0 and $63,000 a year were more likely to have their refinancing application approved by Wells Fargo than Black refinancing applicants earning between $120,000 and $168,000 a year.”

The complaint continues, “Federal data shows that over the last several years thousands of Black homeowners have been unable to maintain the dream of home ownership because of Wells Fargo's ongoing and discriminatory modern day 'redlining' practices.”

The practice of redlining began in the 1930s as a way for government lending agencies to deny funds to members of the Black community. Maps were created with red lines indicating Black neighborhoods as financial risks. The practice was formally stopped by the passing of the Fair Housing Act in 1968, but banks have continued to find un-sanctioned ways to keep the spirit of redlining alive.

Wells Fargo claims diversity and inclusion are among its core values. Their website states, “Our five values, which articulate what’s most important to us” include “what’s right for customers, people as a competitive advantage, ethics, diversity and inclusion, and leadership.”

The lawsuit suggests otherwise, “Black applicants are further subjected to delays, feigned mistakes, and other obstacles, leading many Black Americans to withdraw their requests for refinancing, and leading others to wait indefinitely while Wells Fargo refuses to act upon their applications.”

This week Civil Rights Attorney Ben Crump joined the lawsuit, announcing on Twitter, “We are suing Wells Fargo to demand they CHANGE their practices that are killing Black homeowners opportunities!” At the same time the attorney, who has represented the families of George Floyd, Daunte Wright, and Breonna Taylor, entered the lawsuit. Two additional plaintiffs joined as well, both alleging wrongdoing and discrimination by Wells Fargo.

If plaintiffs continue to come forward, Wells Fargo will be battling a class action lawsuit.