In 2019, the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) jointly launched an investigation into allegations of mortgage pricing discrimination by Wells Fargo and other lenders. The investigation focused on whether lenders engaged in “price optimization,” which means the practice of charging higher prices to certain borrowers based on their race or ethnicity, in violation of the Fair Housing Act and the Equal Credit Opportunity Act.
The investigation found that Wells Fargo had been engaging in pricing discrimination in its mortgage origination business since at least 2005. In February 2021, Wells Fargo agreed to pay $35 million to settle the CFPB and DOJ’s allegations. In addition, Wells Fargo agreed to a three-year consent order that requires the bank to take “where necessary and appropriate” steps to ensure that individuals are not treated differently based on race or national origin in terms of pricing, terms or conditions of loans. The settlement also requires Wells Fargo to implement additional internal oversight and monitoring protocols.
The CFPB and DOJ’s investigation of mortgage pricing discrimination is ongoing, and other banks may be investigated and evaluated for similar practices.
