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Wells Fargo Faces HUD Lending Probe: A Setback for Regulatory Progress?
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Key Takeaways
Wells Fargo shares fell 1.5% in yesterday's trading session after HUD launched a fair-lending review.
Wells Fargo faces a HUD review over allegations that it offered different lending products based on race.
WFC has terminated 14 consent orders since 2019, while the Fed lifted its asset cap in June 2025.
Shares of Wells Fargo & Company (WFC - Free Report) lost 1.5% in yesterday’s trading session after it was revealed that the Department of Housing and Urban Development (HUD) is planning to probe the bank’s compliance with fair-lending laws. Per a Yahoo Finance report citing The Wall Street Journal, HUD sent a letter to CEO Charlie Scharf stating that it would investigate the allegations that the company favored Black and other minority homeowners.
The scrutiny stems from a nearly decade-long effort by WFC to address the homeownership gap among Black Americans. In 2017, the bank committed $60 billion in loans to help add at least 250,000 Black homeowners by 2027. It expanded the initiative in 2022 by offering to refinance minority-owned homes using its own funds. According to the report, by late 2023, the bank had fulfilled about 40% of its original lending commitment and helped refinance roughly 5,100 customers.
The review centers on Wells Fargo’s lending practices, with HUD alleging that the bank adopted a strategy of “sorting” homeowners and offering different products or terms based on race. HUD Secretary Scott Turner said that the agency plans to conduct a full review of WFC’s statements and practices. The review also covers similar initiatives at other banks, reflecting the Trump administration’s broader focus on corporate diversity, equity and inclusion programs and lending practices.
The latest investigation comes after WFC made considerable progress in resolving its longstanding regulatory issues. Since 2019, the bank has terminated 14 consent orders, while the Federal Reserve lifted its nearly seven-year asset cap in June 2025 and closed its 2018 enforcement action related to governance and risk management in March 2026. Reflecting these improvements, last month, S&P Global Ratings upgraded the company’s long-term issuer credit rating to “A-” from “BBB+” with a stable outlook, citing stronger risk management, culture and oversight, improved profitability and deeper client relationships.
The HUD review adds regulatory scrutiny for Wells Fargo at a time when the bank is focusing on business growth and improving profitability. A finding of unlawful differences in lending products could lead to additional compliance requirements and reputational pressure. For investors, WFC’s response and continued progress in profitability, regulatory remediation and client relationships will remain key areas to watch.
Wells Fargo’s Price Performance & Zacks Rank
WFC shares have lost 6.6% in the past six months against the industry’s growth of 4.8%.
Unlike WFC, which is facing a fresh HUD review over its lending initiatives, other firms, such as Credit Acceptance Corporation (CACC - Free Report) and Franklin Templeton (BEN - Free Report) , have resolved regulatory and legal matters involving their lending and investment-management practices.
In September 2026, Credit Acceptance reached a settlement with the New York Attorney General and 40 other state attorneys general over its subprime auto-lending practices. Under the agreement, Credit Acceptance will provide more than $630 million in debt relief to over 55,000 consumers, contribute $60 million to a relief fund and pay $15.5 million to the states, without admitting wrongdoing.
In June 2026, Franklin agreed to pay a $100 million civil penalty to settle SEC charges against its subsidiary, Western Asset Management Company, related to alleged trade-allocation misconduct by its former co-chief investment officer. The settlement also concluded Franklin’s related investigations by the SEC and the Department of Justice.
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Wells Fargo Faces HUD Lending Probe: A Setback for Regulatory Progress?
Key Takeaways
Shares of Wells Fargo & Company (WFC - Free Report) lost 1.5% in yesterday’s trading session after it was revealed that the Department of Housing and Urban Development (HUD) is planning to probe the bank’s compliance with fair-lending laws. Per a Yahoo Finance report citing The Wall Street Journal, HUD sent a letter to CEO Charlie Scharf stating that it would investigate the allegations that the company favored Black and other minority homeowners.
The scrutiny stems from a nearly decade-long effort by WFC to address the homeownership gap among Black Americans. In 2017, the bank committed $60 billion in loans to help add at least 250,000 Black homeowners by 2027. It expanded the initiative in 2022 by offering to refinance minority-owned homes using its own funds. According to the report, by late 2023, the bank had fulfilled about 40% of its original lending commitment and helped refinance roughly 5,100 customers.
The review centers on Wells Fargo’s lending practices, with HUD alleging that the bank adopted a strategy of “sorting” homeowners and offering different products or terms based on race. HUD Secretary Scott Turner said that the agency plans to conduct a full review of WFC’s statements and practices. The review also covers similar initiatives at other banks, reflecting the Trump administration’s broader focus on corporate diversity, equity and inclusion programs and lending practices.
The latest investigation comes after WFC made considerable progress in resolving its longstanding regulatory issues. Since 2019, the bank has terminated 14 consent orders, while the Federal Reserve lifted its nearly seven-year asset cap in June 2025 and closed its 2018 enforcement action related to governance and risk management in March 2026. Reflecting these improvements, last month, S&P Global Ratings upgraded the company’s long-term issuer credit rating to “A-” from “BBB+” with a stable outlook, citing stronger risk management, culture and oversight, improved profitability and deeper client relationships.
The HUD review adds regulatory scrutiny for Wells Fargo at a time when the bank is focusing on business growth and improving profitability. A finding of unlawful differences in lending products could lead to additional compliance requirements and reputational pressure. For investors, WFC’s response and continued progress in profitability, regulatory remediation and client relationships will remain key areas to watch.
Wells Fargo’s Price Performance & Zacks Rank
WFC shares have lost 6.6% in the past six months against the industry’s growth of 4.8%.
Image Source: Zacks Investment Research
Wells Fargo currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Regulatory Matters at Other Firms
Unlike WFC, which is facing a fresh HUD review over its lending initiatives, other firms, such as Credit Acceptance Corporation (CACC - Free Report) and Franklin Templeton (BEN - Free Report) , have resolved regulatory and legal matters involving their lending and investment-management practices.
In September 2026, Credit Acceptance reached a settlement with the New York Attorney General and 40 other state attorneys general over its subprime auto-lending practices. Under the agreement, Credit Acceptance will provide more than $630 million in debt relief to over 55,000 consumers, contribute $60 million to a relief fund and pay $15.5 million to the states, without admitting wrongdoing.
In June 2026, Franklin agreed to pay a $100 million civil penalty to settle SEC charges against its subsidiary, Western Asset Management Company, related to alleged trade-allocation misconduct by its former co-chief investment officer. The settlement also concluded Franklin’s related investigations by the SEC and the Department of Justice.