HUD opens civil rights probe into Wells Fargo mortgage programs

Federal housing regulators just launched a massive civil rights investigation into one of the country's biggest financial institutions. The U.S. Department of Housing and Urban Development is probing Wells Fargo over mortgage lending policies tied to its Special Purpose Credit Program and racial equity homeownership initiatives for Black borrowers. HUD officials say the bank's programs, which aimed to boost homeownership rates for specific racial groups, may violate the Fair Housing Act. The federal scrutiny focuses on commitments made in February 2017 when Wells Fargo promised to lend $60 billion to qualified African American consumers for home purchases by 2027. The bank followed up in 2022 with $210 million to advance racial equity and another $150 million to lower mortgage rates and refinancing costs. HUD Assistant Secretary for Fair Housing and Equal Opportunity Craig Trainor sent a formal letter to Wells Fargo CEO Charles Scharf on Wednesday detailing the investigation. "The Fair Housing Act forbids racial discrimination in housing," Trainor said in a statement. HUD Secretary Scott Turner added that dividing Americans based on race is unethical and un-American. Investigators are demanding the bank preserve all records, emails, and texts related to these mortgage policies. From January to June of this year, Wells Fargo ranked as the 15th-largest mortgage lender in the country with $15.3 billion in volume. Here is what this means for you if you work in real estate or banking: federal regulators are cracking down hard on any lending program that uses race to set loan terms or rates, meaning compliance officers everywhere are sweating bullets right now. Wells Fargo did not immediately reply to requests for comment. If investigators find violations, HUD could file an administrative complaint or send the case straight to the Department of Justice for enforcement.