By CultureBanx Team
- Wells Fargo’s 47% approval rate gave it the worst record among major lenders when considering refinancing for Black homeowners
- African American homeowners were approved 71% of the time by all other mortgage lenders
Wells Fargo (WFC -1.01%), the nation’s third largest bank by assets, is stifling Black homeownership by rejecting refinance applications sent in by Black homeowners, while approving almost three-quarters of those sent in by white applicants. A Bloomberg analysis found that Wells Fargo’s 47% approval rate gave it the worst record among major lenders when considering refinancing for Black homeowners. Homeownership is still one of the main avenues for all Americans to build wealth, though the national rate of Black homeowners stands at 41%. With nearly $200 billion lost in wealth and equity since the Great Recession, African Americans are at risk to have all median wealth extinguished by 2053, and Wells Fargo gamesmanship with mortgage applications will only make things worse.
Why This Matters: For Black America the pursuit of the American Dream through homeownership has never wavered with adults in this demographic, between the ages of 26 and 39, sparking a nationwide rise in the overall rate. U.S. Census data shows this group raised the homeownership rate for all Black Americans by more than 2% during the first three quarters of 2020.
A National Association of Realtors analysis showed 5% of Americans who bought homes were Black. However, Wells Fargo fell well below industry averages when it came to lowering interest rates through a home refinance to African Americans, who were approved 71% of the time by all other lenders.
It’s important to note that Black Millennials who bought homes in 2020 are not representative of the bulk of Black Americans, whose economic standing has worsened throughout the pandemic. Some economists were concerned whether Black Millennials could even buy homes given their disproportionate rates of student loan debt and other systemic inequities like mortgage bias and redlining.
Until 1968, banks could deny mortgage loans based on a homebuyer’s race or neighborhood. Predominantly white communities could pass zoning restrictions designed to keep people of color out of neighborhoods.
It’s not just Black Americans experiencing the stiff hand by Wells Fargo’s mortgage application denials. Bloomberg looked through information available via the Home Mortgage Disclosure Act and found Wells Fargo was more sparing when it came to approving refinances overall by only approving 67% to Asian borrowers and 53% to Hispanic borrowers.
Situational Awareness: Government housing policies such as redlining, have had lasting effects, from concentrating poverty, to stifling African American homeownership, and has contributed to the widening racial wealth gap. Even Atlanta Federal Reserve President Raphael Bostic has called out things like the impact of long-outlawed policies including how “redlining” Blacks out of white neighborhoods continues to influence the ability of minority families to amass wealth. Simply put, redlining and other housing policies continue to undermine the accumulation of Black wealth.
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