HUD launches probe into Wells Fargo's race-targeted homeownership programs
The Department of Housing and Urban Development announced an investigation into Wells Fargo’s mortgage initiatives aimed at increasing black homeownership, with Housing Secretary Scott Turner calling the race-based approach immoral.
Wells Fargo’s shares dropped after HUD issued a formal inquiry into the bank’s mortgage programs designed to boost black and minority homeownership, a strategy that Housing Secretary Scott Turner described as immoral and un-American. The investigation, communicated in a Wednesday letter to CEO Charlie Scharf, targets a $210 million initiative that includes a $150 million rate-reduction fund and $60 million in grants for borrowers of color.
Turner asserted that even if no law was broken, the bank’s race-based decision-making is ethically wrong. The review comes amid a broader regulatory reversal, including a new CFPB rule that prohibits for-profit lenders from using race, color, national origin or sex in eligibility decisions. HUD is also examining comparable efforts at other banks, potentially expanding the scrutiny beyond Wells Fargo. The agency has not yet indicated whether the inquiry will become a formal Fair Housing Act complaint.
Why it matters
The probe could reshape how banks design mortgage products and affect funding for minority homebuyers.
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