Regulators caught Wells Fargo, other banks in probe over mortgage pricing discrimination

In June of 2020, the Consumer Financial Protection Bureau (CFPB) and five other financial regulatory agencies announced a joint investigation of major banks, including Wells Fargo, for improperly pricing and steering home mortgage lender and brokerage fees. The CFPB claimed that the banks, which also include Bank of America, Citibank, JPMorgan Chase, and U.S. Bank, had violated the Equal Credit Opportunity Act (ECOA).

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The ECOA prevents financial institutions from charging different fees based on applicants’ race, gender, marital status, ethnicity, national origin, or other characteristics.

The investigation was prompted by tips from housing advocates and consumer groups that some minority groups were paying higher fees than white homebuyers.

The regulators found that the banks had set up fee structures and processes that had the effect of disadvantaging “protected classes” of customers. They found that some of the banks had used different pricing methods when offering mortgages to different groups.

The agencies said that some of the practices violated the ECOA and ordered the banks to refund customers who had been charged higher fees and to take steps to ensure that they were not illegally discriminating in the future.

Wells Fargo was one of the biggest banks involved in the investigation, and it was fined a total of $1.2 billion for its role in the mortgage pricing discrimination scandal. It was forced to pay $500 million to resolve the investigation and also to make restitution to the customers who were affected.

The CFPB and other agencies noted that the investigation was just the latest example of Wells Fargo’s long history of consumer financial misconduct, which had resulted in billions of dollars in fines over the years.

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