Class Action Alleges Wells Fargo Mortgage Lending Practices Discriminate Against Black Borrowers

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A Georgia resident alleges in a proposed class action that Wells Fargo Bank, N.A.’s mortgage origination and underwriting practices “intentionally and disproportionately” discriminate against African American home loan applicants. 

The plaintiff alleges in the 14-page suit that Wells Fargo has a “long history” of discriminating against African Americans and maintains a corporate culture “replete with harmful racial stereotypes and biased views” about African American customers. The suit alleges that although Wells Fargo has long touted its willingness to symbolically support racial equality in banking, such as investing in Black-owned banks, the defendant “has not and will not meaningfully redress its systematic discrimination against its Black and African American customers, borrowers, and mortgage applicants.” 

According to the suit, the plaintiff, an African American man, had a FICO credit score over 750 when he applied for his mortgage with Wells Fargo. Due to his credit score, the plaintiff believed he should have qualified for the bank’s prime interest rate, which would have saved him significant money over time on his mortgage, the suit relays. 

The lawsuit alleges, however, that Wells Fargo offered the plaintiff an interest rate that was nearly three points higher than the bank’s prime interest rate, which the case says is “disproportionately and discriminatorily offered to white applicants.” 

“Believing it to be a mistake, [the plaintiff] spoke to Wells Fargo’s home lending department to have his credit report rechecked and for his interest rate to be lowered,” the case reads. “Instead, the Firm refused to reconsider his credit score or his interest rate.” 

The filing says that in a September 2019 letter to the plaintiff, Wells Fargo articulated that it did not use solely FICO credit scores to determine home interest rates, but also took into account “a unique scoring model” that weighed more than credit scores to evaluate mortgage applications. 

The complaint alleges more specifically that when determining home loans, interest rates and points, for instance, Wells Fargo intentionally uses factors that facilitate redlining and reverse redlining against and otherwise disfavor African American borrowers. According to the suit, Wells Fargo places Black borrowers in “predatory,” higher cost loans, even when they qualify for prime loans on better terms. The case also says Wells Fargo fails to underwrite loans for Black borrowers based on traditional criteria such as debt-to-income ratio, loan-to-value ratio, FICO score and work history, and instead uses factors that “intentionally discriminate and/or have a disparate impact” on Black borrowers. 

Further, the case alleges Wells Fargo imposes on minority borrowers subjective surcharges of additional points, fees and other credit and servicing costs “over and above” an otherwise objective, risk-based financing rate for loan products. The lawsuit also says Wells Fargo charges excessive points and fees that are not associated with any increased benefits to Black borrowers and fails to adequately monitor its own policies and practices with regard to mortgage loans, including its origination, marketing, sales and risk management practices. 

“The racially discriminatory policies and practices at Wells Fargo are uniform and national in scope and create an artificial, arbitrary, and unnecessary barrier to fair housing opportunities for Black or African American borrowers,” the lawsuit alleges. 

According to the case, the plaintiff ultimately applied for and received a home loan from another bank at its prime interest rate. 

The lawsuit looks to cover all African American consumers who applied for credit related to residential real estate and who were allegedly subjected to discrimination by Wells Fargo due to their race.

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