HUD Investigates Wells Fargo for Alleged Discriminatory Lending Practices

In a letter to Wells Fargo CEO Charlie Scharf, HUD Assistant Secretary for Fair Housing and Equal Opportunity Craig Trainor criticized the bank's special purpose credit programs aimed at assisting Black borrowers. These programs, introduced in 2017 and 2022, were described as a means to create at least 250,000 African American homeowners by 2027 through a $60 billion lending initiative, and a 2022 program that allocated $150 million to help eligible Black homeowners refinance their mortgages.

Trainor stated that these initiatives represent an importation of racial discrimination into the housing market, asserting that the Fair Housing Act prohibits race-based home loans. He noted that Wells Fargo publicly committed to what he termed a 'racialized home loan policy,' marking it as the first major lender to do so.

In 2022, Wells Fargo's program aimed to address a gap in acceptance rates for Black borrowers, which the bank acknowledged lagged behind the industry average by 15 percentage points. Despite this effort, Trainor argued that attempting to reduce statistical differences in home ownership by providing loans based on race is inappropriate and illegal under federal law.

Wells Fargo has refrained from commenting on the investigation. As banks have distanced themselves from diversity, equity, and inclusion (DEI) initiatives in recent years due to shifting federal policies, Trainor emphasized that compliance with the Fair Housing Act should be based on the bank's actual practices rather than public relations efforts.

HUD Secretary Scott Turner remarked that even if Wells Fargo's actions did not violate legal standards, the act of segregating Americans by race is fundamentally wrong.