Modern Day Redlining

By Roshni Master, Staff Writer

Photo courtesy of

On March 18, a Black homeowner filed a complaint at the district court level in the Northern District of California against Wells Fargo Bank, claiming racial discrimination.The homeowner, Aaron Braxton, highlights how Wells Fargo continues to discriminate against Black Americans, preventing them from reaping the full financial benefits for United States citizens, such as home ownership.Some of these discriminatory practices include refusal to insure mortgages around Black neighborhoods, delaying or denying applications to refinance loans for Black applicants, and rejecting a high rate of credit applications from “qualified Black applicants through automated algorithms and machine learning systems.”3

Braxton, a teacher and playwright with a master’s degree from the University of Southern California, purchased his Los Angeles home about twenty-two years ago with a Wells Fargo home mortgage.Wells Fargo took longer to process Braxton’s application, in comparison to processing times experienced by non-Black applicants, and, after initially denying his request, granted his request a year and a half later at an above market interest rate.5

California homeowners are not the only people experiencing discriminatory practices. Home prices in Fulton County in Atlanta, Georgia have long since lagged as a result of redlining, a discriminatory practice withholding services to those residing in neighborhoods classified as “risky” to lend to. Additionally, soft denials, in which lenders leave applicants hanging or encourage them to look elsewhere before an application is submitted, are rampant.Mauise Ricard III, an engineer at Microsoft residing in Atlanta, experienced similar issues when he applied, in February 2020, to Wells Fargo to refinance one of his investment properties, located in a predominantly Black neighborhood. With a credit score in the 800s, placing Ricard in America’s credit elite, it was reasonable to believe there would be no issues with the application.8  However, four months later, the Wells Fargo loan officer advised Ricard he would have to pay a higher 4.5% rate, although the Federal Reserve had slashed rates to historic lows at this time.Weeks later, Ricard’s application was denied.10

Braxton and Ricard are not the only victims of these ongoing discriminatory practices. A recent analysis conducted by Bloomberg found Wells Fargo approves a disproportionately lower percentage of refinancing applications for its Black applicants: forty-seven percent, in comparison to its peers, seventy-one percent.11 The data analyzed was collected from an applicant’s race, gender, ZIP code, and whether the application was approved or denied.12 Banks must continually report such information in compliance with the Home Mortgage Disclosure Act.13

In response, Wells Fargo claims “additional, legitimate, credit-related factors”, unavailable from the data acquired by the Home Mortgage Disclosure Act data, were responsible for the differences in the refinancing approval rate for Black homeowners.14 Wells Fargo, however, has had a history of discriminatory lending practices. Ten years ago, Wells Fargo was investigated by the Department of Justice and sued by the state of Illinois for the very same claim: discriminatory lending.15 The district court found that Wells Fargo was aware of the higher interest rates it charged Black and Hispanic borrowers and did not take sufficient action to mitigate these practices.16

The question remains, when will there be sufficient action to end discriminatory practices? Credit scores and appraisal bias are but two factors when reviewing loan applications.17 Experts have weighed in, explaining two things have stood out as to why we continue to see prominent disparity into the twenty-first century: “the impact of lenders’ proprietary algorithms, or overlays, and the failure of policymakers to mandate streamlined refinancing programs”.18

Here, it is likely Wells Fargo will find itself in yet another multi-million-dollar settlement for its discriminatory practices.  As individuals, such as Braxton, begin to pushback against these practices, it remains to be seen whether an additional discrimination lawsuit will force Wells Fargo to reflect on its contribution to creating hardships for minorities by financial discrimination. 



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