the staff of the Ridgewood blog
Ridgewood NJ, Wells Fargo, once the largest mortgage lender in America, is facing accusations of discrimination linked to the industry’s widespread practice of providing mortgage loan discounts to specific borrowers, as reported by CNBC.
According to anonymous sources, the bank received a Matter Requiring Attention (MRA) notice from the Consumer Financial Protection Bureau (CFPB) highlighting issues related to loan discounts. The report, disclosed on Monday, did not specify whether the accusations against Wells Fargo pertained to discrimination or oversight lapses.
The practice of loan discounts, often referred to as pricing exceptions, involves lenders deviating from established credit standards. Regulators have been scrutinizing whether certain borrowers, based on factors such as race, gender, and age, received fewer pricing exceptions, potentially violating U.S. fair lending laws.
Mortgage bankers at Wells Fargo, according to CNBC, would request pricing exceptions, typically resulting in a reduction of a customer’s Annual Percentage Rate (APR) by 25 to 27 basis points to enhance competitiveness in the market.
The MRA from the CFPB was issued to Wells Fargo a couple of months before the company’s announcement of scaling down its mortgage business in January. In response to regulatory pressure, Wells Fargo reportedly adjusted its policies in 2023, requiring rigorous documentation of competitive bids, as per sources cited by CNBC.
An “MRA” notice stands for “Matter Requiring Attention,” and it is a communication issued by the Consumer Financial Protection Bureau (CFPB) to a financial institution or entity that it regulates. The purpose of the MRA is to highlight specific concerns or issues that the CFPB has identified during its examinations or investigations.
When the CFPB finds areas of non-compliance, potential risks, or other matters that need attention within a financial institution, it issues an MRA to bring those issues to the attention of the institution’s management. The MRA typically outlines the identified problems, the regulatory requirements or consumer protection laws involved, and may suggest corrective actions that the institution should take to address the concerns.
Financial institutions are expected to respond to the MRA, providing a plan to remediate the identified issues and prevent similar problems in the future. The CFPB uses MRAs as part of its regulatory oversight to ensure that financial institutions comply with consumer protection laws and maintain fair and transparent practices.
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Logic dicates that loans be made to borrowers who can actually pay back the loan.
Checking ‘boxes’ with respect to race and gender should have no bearing on the decision.
Stop with the crazy talk !
You know what’s funny I just received a check today from the bank regarding a mortgage I had 10 years ago. That they were overcharging me. It wasn’t a lot of money but it was just the point they got caught. Scammers.