Wells Fargo Bank, N.A. · Governance finding · severity 3 of 5
From February 2022, Black and Hispanic mortgage applicants filed six putative class actions against Wells Fargo in the Northern District of California, alleging that its centralized automated underwriting, which they called CORE/ECS, denied them loans, delayed them or gave them worse terms. The suits followed a March 2022 Bloomberg analysis that Wells Fargo approved 47% of Black refinance applicants in 2020 against 72% of White applicants. Wells Fargo said human underwriters decide and that its scoring models are simple scorecards that do not use AI. On 5 August 2025 the court denied class certification for lack of commonality, and the Ninth Circuit declined to hear an appeal. The named plaintiffs then settled individually; on 30 September 2026 the court closed the case. No terms were disclosed and no court found discrimination.
Record last reviewed Oct 21, 2026 · Markdown
Date
Institution
Country
United States
AI system
CORE workflow tool, Risk Engine and Enhanced Credit Score (ECS) models · Automated mortgage underwriting and credit-scoring rules, not described as AI (Wells Fargo told the court its ECS models do not use artificial intelligence) · vendor: Wells Fargo (in-house)
AI?
Automated system not described as AI
The system was automated, but neither the institution nor a regulator described it as AI; it is listed because it is routinely discussed as an AI failure.
Category
Status
Settled
Severity
3 of 5
Impact
The plaintiffs said their proposed classes would include at least 119,100 minority applicants; no class was certified. · No court finding of discrimination. The named plaintiffs settled individually on undisclosed terms; no payment amount is public.
What happened?
The first complaint was filed on 17 February 2022. On 11 March 2022 Bloomberg News published an analysis of federal Home Mortgage Disclosure Act data showing that only 47% of Black homeowners who completed a refinance application with Wells Fargo in 2020 were approved, against 72% of White homeowners, the widest gap among major lenders. Further suits followed; one, filed in March 2022, claimed that the bank's lending algorithms amplified the U.S. financial system's historically racist treatment of Black customers, according to The New York Times.[1][4][5]
On 18 January 2023 the court consolidated six putative class actions into In re Wells Fargo Mortgage Discrimination Litigation (No. 3:22-cv-00990), noting that all of them alleged the same theory: that Wells Fargo discriminated against non-White customers in residential mortgages and refinances, in violation of the Equal Credit Opportunity Act and the Fair Housing Act among other laws.[2]
According to the court's August 2025 summary of the amended complaint, the plaintiffs alleged "digital redlining" implemented through a "centralized 'pioneering automated underwriting' system -- sometimes referred to as CORE -- without sufficient, or sometimes any, human supervision or involvement", and said the CORE/ECS system disproportionately assigned minority applicants to lower credit risk classes. Wells Fargo's declarations, which the plaintiffs did not dispute, described CORE as a front-end workflow tool that does not make lending decisions; risk classes are set by tens of thousands of business rules in a separate Risk Engine; and its two Enhanced Credit Score models are simple scorecards of which "[n]either utilizes artificial intelligence". The plaintiffs did not dispute that human underwriters make the final decision.[3][6]
On 5 August 2025 Judge James Donato denied class certification. The court found that the plaintiffs had shown a statistically significant racial disparity in approval rates but no classwide evidence of "robust causality" linking that disparity to the CORE/ECS system, and so failed Rule 23(a)'s commonality requirement. The ruling left the named plaintiffs' claims to be tried individually. The Ninth Circuit denied two petitions for permission to appeal on 8 January 2026.[1][3][6]
Between May and June 2026 most of the named plaintiffs filed a notice of settlement and stipulations dismissing their claims with prejudice, while the remaining plaintiff and Wells Fargo obtained a stay. On 30 September 2026 the court entered an order stating that "all parties have now settled" and closed the case. The settlement terms are not on the public docket. A separate shareholder derivative case over the bank's hiring and lending practices, which led to a $100 million mortgage-assistance fund approved in May 2026, is a different lawsuit and was not a resolution of these borrowers' claims.[1][7]
When did it happen?
- Feb 17, 2022
First putative class action filed against Wells Fargo in the Northern District of California (No. 3:22-cv-00990).[1]
- Mar 2022
A further suit cites the Bloomberg analysis and alleges the bank's lending algorithms amplified historical discrimination.[5]
- Mar 11, 2022
Bloomberg News reports Wells Fargo approved 47% of Black refinance applicants in 2020 versus 72% of White applicants.[4]
- Jan 18, 2023
Court consolidates six putative class actions as In re Wells Fargo Mortgage Discrimination Litigation.[2]
- Aug 5, 2025
Class certification denied for lack of commonality; claims left to proceed individually.[3][6]
- Jan 8, 2026
Ninth Circuit denies the plaintiffs' petitions for permission to appeal the class ruling.[1]
- Sep 30, 2026
Court notes that all parties have settled and closes the case.[1]
What was the impact?
- Customers: The plaintiffs said their proposed classes would include at least 119,100 minority applicants; no class was certified.[1][3]
- Other: No court finding of discrimination. The named plaintiffs settled individually on undisclosed terms; no payment amount is public.[1][3]
Severity 3 of 5: Alleged material harm to a proposed class the plaintiffs put at 119,100 or more minority applicants, litigated for four and a half years; but no court found discrimination, class certification was denied and the case ended in undisclosed individual settlements.
How did Wells Fargo Bank, N.A. respond?
In March 2022 a Wells Fargo spokesman told The New York Times that the bank used the same underwriting practices for all customers regardless of race or ethnicity, and that its own analysis found "additional, legitimate, credit-related factors that are not available in H.M.D.A. data were responsible for the differences in our refinance approval rate for Black homeowners." In court the bank said CORE is a workflow tool that does not make lending decisions, that human underwriters decide, and that its ECS scorecards do not use artificial intelligence. Wells Fargo declined to comment on the August 2025 class-certification ruling, according to Banking Dive.[3][4][5][6]
What was the outcome, and did regulators act?
Settled. After class certification was denied and the Ninth Circuit declined review, the named plaintiffs settled and dismissed their claims with prejudice; the court closed the case on 30 September 2026 (the docket later shows a status conference set for 29 October 2026, without a stated purpose). No regulator action on this underwriting system has been reported, and no court ruled on whether the system discriminated.[1][3]
Did a court find that Wells Fargo's mortgage underwriting discriminated?
No. The court never ruled on the merits. In August 2025 it denied class certification because the plaintiffs showed a statistical racial disparity in approvals but no classwide evidence that the CORE/ECS system caused it; the named plaintiffs later settled individually and the case closed in September 2026.
Was Wells Fargo's mortgage underwriting system AI?
Not on the record. The plaintiffs called it a centralized automated underwriting system and lending algorithms. Wells Fargo told the court that CORE is a workflow tool, that business rules in a Risk Engine set risk classes, that human underwriters decide, and that its Enhanced Credit Score scorecards do not use artificial intelligence.
Is the $110 million Wells Fargo settlement part of this case?
No. The $110 million settlement approved in May 2026, including a $100 million mortgage-assistance fund, resolved a separate shareholder derivative suit against directors and executives over hiring and lending practices. The borrowers' class case described here ended in individual settlements whose terms were not disclosed.
Was any money paid to the borrowers?
The named plaintiffs settled with Wells Fargo in 2026 and dismissed their claims with prejudice, but the settlement terms are not on the public docket. Because no class was certified, the wider group of applicants the plaintiffs sought to represent received nothing through this case.
- In re Wells Fargo Mortgage Discrimination Litigation, No. 3:22-cv-00990 (N.D. Cal.), docket court
- Order re Consolidation and Interim Lead Counsel, In re Wells Fargo Mortgage Discrimination Litigation (Dkt. 102) court
- Order re Class Certification, In re Wells Fargo Mortgage Discrimination Litigation (Dkt. 328) court
- Wells Fargo Rejected Half Its Black Applicants in Mortgage Refinancing Boom news
- A Black Homeowner Is Suing Wells Fargo, Claiming Discrimination news
- Wells Fargo won't face class-action mortgage discrimination lawsuit news
- Wells Fargo settles lawsuit alleging hiring, lending discrimination news
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