Exponential Technologies to the Rescue for Home Appraisals

If we can't get the bias out of the appraisers, let's get the appraisers out of the process 

Ric Edelman: Hey, you want to refinance your mortgage at Wells Fargo? Their the nation's third largest bank. If you're white, 72% chance of getting approved to have your mortgage refinanced. If you're black, only 47%. Those are the numbers based on Bloomberg's analysis of the refinance applications at Wells Fargo. Wells Fargo has not disputed Bloomberg's figures, they just say they're more selective than other lenders. At JPMorgan Chase, the biggest bank in America, 90% of whites, 81% of blacks get approved to refinance their loans. Bank of America, it's 78% to 66%. At Rocket Mortgage, it's 86% to 79%. But at Wells Fargo, it's 72% to 47%. So now, one Wells Fargo customer is suing the bank. Aaron Braxton says his refinance application was denied and he's suing, claiming racial discrimination. The lawsuit says Wells Fargo's behavior pushed black homeowners into foreclosure. It cites data from 8 million refinance applications in 2020, saying that Wells Fargo is more likely to approve white borrowers earning less than $63,000 than black borrowers earning 2 to 3 times as much. You know, Wells Fargo has been the bad boy of banking for decades. Since 2000, Wells Fargo has paid more than $21 billion in fines for more than 200 offenses. Financial offenses, consumer protection offenses, government contracting offenses, employment related offenses, mortgage abuses, banking violations, toxic securities abuses, fraud and investor protection violations. They fired their CEO, brought in a new one, but it doesn't seem like anything's changed. They even hired a new executive to remake the bank's image. She quit after less than two years on the job. Why is Wells Fargo still allowed to be in business? Well, finally, they may not be. Rohit Chopra, he's director of the Consumer Financial Protection Bureau, the CFPB. And Chopra says that Wells Fargo's licenses should be revoked. He named Wells Fargo as one of the worst repeat offenders, having broken consumer protection laws at least three times. Well, let's get back to that refi problem, where 72% of Wells Fargo's white customers got approved to refinance, but only 47% of black customers got approval. Here's an overall industry statistic: of all the appraisers in America, 85% of them are white. 77% of them are men. Studies show that appraisers often undervalue homes, sometimes by hundreds of thousands of dollars when the homeowner is black or Latino. Exponential technologies to the rescue. Remote appraisals where the appraiser never has to go physically see the house. They never meet the homeowner. They don't see family portraits on the walls. Fannie Mae and Freddie Mac are now allowing desktop appraisals. Appraisers analyze the home without physically inspecting the property. The home valuations are based on tax records and comparable homes in the neighborhood and the floorplans. Fannie and Freddie say the process is as accurate as traditional appraisal methods. If we can't get the bias out of the appraisers, let's get the appraisers out of the process. I'm Ric Edelman. This is The Truth About Your Future.