In the last month, the behaviors of two of the nation’s foremost banks have been a study in contrasts when it comes to actions taken to redress racial segregation. In early August, Bloomberg reported that Wells Fargo is pulling out of the home loans business after years of being considered the nation’s largest private home lender. This came on the heels of another Bloomberg report from March that revealed Wells Fargo had only approved 47 percent of Black refinancing applications in 2021, a mark 25 percentage points lower than its approval rate for white refinancing applications and a rate far beneath Black refinancing approval rates of peer financial institutions.

At the very end of August, on the other hand, Bank of America announced that it would begin a pilot program to offer no-down-payment mortgages to first-time homebuyers in predominantly Black and Hispanic neighborhoods in select U.S. cities like Miami and Charlotte. While credit scores effectively freeze many rental households and potential homebuyers of color out of the mortgage market, this new program from Bank of America also uses metrics other than credit scores—such as rent and phone payment histories—to determine eligibility for the loans.

Ensuring that first-time homebuyers of color have access to affordable home financing is crucial to preserving Black wealth, homeownership rates, and residential stability. Especially in a soaring rental market with a rapidly diminishing number of affordable options. As of 2019 only 7 percent of ZIP codes in the nation’s largest 100 metropolitan areas were affordable to local Black households with median incomes. During 2022, rents increased by more than 10 percent in 116 out of 150 large U.S. metropolitan markets as the number of cost-burdened renters also rose. Supporting sustainable Black homeownership is also crucial to the future health of the housing market. Though the percentage of Black renter households who could afford to buy a home fell by half over the last year to less than 7 percent, households of color drove the majority of new household formation in the U.S. during the pandemic.

Banks who have participated in systemic discrimination against Black households through practices like unequal mortgage approval have a duty to redress those wrongs through programs that foster sustainable Black homeownership. Both Bank of America and Wells Fargo were fined in the hundreds of millions of dollars for predatory lending practices that disproportionately robbed households of color of homes and wealth during the foreclosure crisis of the Great Recession (in Bank of America’s case, this was due to actions taken by mortgage lender Countrywide before Bank of America acquired that lender). With these recent actions, Bank of America is taking what appears to be a laudatory proactive step—and it is just a step, not a solution—to redress unequal lending practices that have resulted in continued unequal access to homeownership for Black households. Wells, meanwhile, essentially seems to have begun bowing out of the mortgage lending business when it felt that business could no longer go on as usual…that “usual,” of course, meaning unequal.

Without redress that also includes the participation of major mortgage lenders and financial institutions like Wells Fargo and Bank of America, continued unequal access to financing will prevent a closing of the racial wealth and homeownership gaps, in turn helping maintain segregation. Without redress, the majority of Black households will continue to face residential instability as renter households with limited protections against displacement compared to homeowners.

At the Redress Movement, we are interested in building community power to address these and other issues related to segregation by agitating for actions of redress responsive to segregation’s history. To engage with more news stories related to redress and to hear more about our work, sign up to join our mailing list and keep an eye out for news updates in this section of our website. Also be sure to explore our resource pages where you can learn more about the history and consequences of segregation, read through the vocabulary of segregation, or use our Citizens’ Guide to discover how segregation affects your community.