Regulators caught Wells Fargo, other banks in probe over mortgage pricing discrimination
In 2017, regulators discovered that Wells Fargo and several other banks had, for years, been engaging in mortgage pricing discrimination. This practice was revealed during a review by the Consumer Financial Protection Bureau (CFPB). The CFPB found that the banks had been charging some customers higher interest rates on their home loans compared to other customers with similar credit scores, resulting in millions of dollars in higher mortgage payments for those affected.
In response, the CFPB imposed a series of fines on the banks involved in the practice. Wells Fargo specifically was penalized $20 million, along with an order to pay an additional $660 million in restitution to homeowners directly affected by the discriminatory practice. Wells Fargo was also forced to make changes to its practices, such as enhancing the way it assesses the risk associated with individual customers, and changing the way in which it designs its home loan products.
The CFPB’s investigation revealed that Wells Fargo had been using discriminatory practices since at least 2008, and likely longer. The scandal serves as an important reminder of the need for strong regulation of the banking industry, and the potential consequences for banks engaging in unlawful and unethical practices.