By Shawn Donnan, Ann Choi, Hannah Levitt, and Christopher Cannon March 11, 2022
Nationwide, only 47% of Black homeowners who completed a refinance application with Wells Fargo in 2020 were approved, compared with 72% of White homeowners, according to a Bloomberg News analysis of federal mortgage data. JPMorgan Chase & Co., the largest U.S. bank by assets, accepted 81% of refinancing applications from Black homeowners in 2020 compared with 90% from White ones. Bank of America Corp. approved 66% of its Black applicants and 78% of White ones. Rocket Mortgage LLC, which received 1 million refinancing applications in 2020, more than any other lender, had the smallest gap: It approved 79% of Black applicants and 86% of White ones.
What does this mean? Like the industry as a whole, Wells Fargo approved a greater share of applications from low-income White homeowners than all but the highest-income Black applicants, who had an approval rate about the same as White borrowers in the lowest-income bracket. [In other words, if you were Black, had a high income and I assume a high credit score, you were as likely to be approved as a low-income White applicant.]
The refinancing gap gets at the ability of Black families to build on the wealth they have. Not being able to refinance a home “means that people have less resources to invest in their children, less resources to start businesses, less resources to renovate their homes, less resources to buy additional homes,” says Andre Perry, a senior fellow at the Brookings Institution whose 2018 study found that the average Black home was valued at $48,000 less than its White equivalent. That differential amounts to $156 billion in missing Black wealth. Read the article HERE.