By: Joe Gillen
Several large financial institutions have faced head recently for claims of mortgage discrimination in low-income neighborhoods, and now community activists are also stepping up and calling for action.
A group of community advocates is currently urging the Office of the Comptroller of the Currency to fail Wells Fargo when it undergoes its Community Reinvestment Act examination, according to American Banker. The group argues that Wells Fargo has engaged in "abusive, fraudulent and discriminatory practices" in its mortgage lending business that has had an adverse impact not only on individuals, but on entire communities. However, the OCC rarely assigns negative or failing grades to banks, and Wells Fargo itself received the highest rating possible during its last exam in 2008.
"This will be our first exam since 2008 and we're feeling good about how we're going to do," said Mike Rizer, director of community relations and CRA risk management at Wells Fargo, according to American Banker. "There's nothing wrong with the community organizations communicating their positions. This is really not unusual and is part-and-parcel of the process that we go through every four years when we go through the exam."
Mortgage industry continues to experience stops and starts
All eyes have been focused on the mortgage industry in recent years as several issues and scenarios play out, ranging from Basel III and mortgage disclosure rules to the robo-signing controversy and strengthening home prices. However, most of the attention has been focused on the banks themselves, rather than regulations they are facing, as more consumers battle foreclosures, refinancing agreements and new home purchases. While home purchases and values appear to be on the mend, foreclosures remain elevated and refinancing deals are difficult to come by. As lending remains tight, many lawmakers as well are turning their attention to how banks are utilizing their resources and servicing neighborhoods that were hit hardest by the housing crisis.
While large banks have drawn the most scrutiny from lawmakers and advocates alike for questionable banking strategies, smaller institutions have managed to keep access to credit largely open, which has helped many families secure the funds they need to accomplish their dreams of homeownership. However, the effects of new regulations have created a great deal of uncertainty among banks and consumers alike about access to credit in the future.