By Yizhu Wang and Katy O'Donnell | Updated on Oct 07, 2026 at 07:34 PM
Wells Fargo & Co. is under investigation by the Department of Housing and Urban Development over whether the bank violated fair-lending laws as it sought to boost homeownership among Black Americans.
The department sent Wells Fargo Chief Executive Officer Charlie Scharf a letter about the probe, saying that it was initiated in response to his bank’s “repeated public promotion of explicit race-based lending policies.”
Wells Fargo shares dropped nearly 1.6% to $80.25 at 2:07 p.m. Wednesday after the Wall Street Journal first reported the investigation. A spokesperson for Wells Fargo declined to comment.
Companies and institutions are facing increasing scrutiny over policies seeking to encourage diversity. The Trump administration has been working to root out race-based admission and hiring practices at US universities.
“Attempting to close statistical racial gaps in homeownership by doling out loans based on race is no way to do business,” Craig Trainor, the department’s assistant secretary for fair housing and equal opportunity, said in the letter. “The Trump Administration will not tolerate the kind of destructive discriminatory lending practices that compelled Congress to enact the Fair Housing Act in the first place.”
In 2017, Wells Fargo announced a $60 billion commitment to boost Black homeownership in the US. The bank expanded that work in 2022, with a $210 million effort to expand racial equity in residential lending after a Bloomberg News investigation found the bank approved Black homeowners seeking to refinance mortgages in the pandemic at a far lower rate than White ones.
The racial disparities in home lending drew broader criticism, prompting New York City to stop opening any new Wells Fargo depository accounts following the investigation.
Read More: Wells Fargo Rejected Half Its Black Applicants in Mortgage Refinancing Boom
In 2023, Wells Fargo said it would shrink its US mortgage business to mainly focus on its existing customers and underserved communities. It decided to exit the correspondent mortgage business and reduce the size of its servicing portfolio. The bank was seeking to cut risk in the mortgage unit by making it smaller and simpler, Wells Fargo said at the time.