A Racial Refinancing Gap At Wells Fargo

○ It turned down half its Black refi applicants, far more than other major lenders

- Pat Regnier

When Mauise Ricard III paid a $560.43 application fee to Wells Fargo & Co. on Valentine’s Day 2020 to refinance his mortgage on a four-bedroom brick colonial in a leafy suburb of Atlanta, he had every reason to expect an easy ride. The Microsoft Corp. engineer is married to a doctor and has a credit score north of 800, putting him in America’s credit elite. The loan officer at the bank even told him he was probably eligible for a fast-track appraisal.

It didn’t take long for problems to appear. Ricard’s house—an investment property that was his home before he moved to another Atlanta suburb in 2017—is in a predominantly Black neighborhood, and in April the loan officer emailed to say that “perhaps the area is not eligible” for a rapid valuation. By May she was writing to say the underwriter had more questions. Soon after, Ricard was told he’d have to pay a higher 4.5% rate, even though the Federal Reserve had slashed rates to historic lows. Within weeks, Wells Fargo had denied his application. “They kept moving the needle,” Ricard says. “They didn’t want to move forward for whatever reason.”

Ricard wasn’t alone. Only 47% of Black homeowners who completed a refinance application with Wells Fargo in 2020 were approved, compared with 72% of White homeowners, according to a Bloomberg News analysis of federal mortgage data. Black applicants had lower approval rates than White ones at all major lenders, but Wells Fargo had the biggest disparity and was alone in rejecting more Black homeowners than it accepted.