The Trump administration is investigating a Wells Fargo program to increase the homeownership rate of Black Americans, signaling a sharp escalation in its broadside against diversity, equity and inclusion programs.

The Department of Housing and Urban Development opened the federal civil rights probe, accusing the bank of sorting homeowners by race.

Craig Trainor, assistant secretary for fair housing and equal opportunity, told bank CEO Charlie Scharf in a letter that the agency would scrutinize the bank’s commitment to expanding access to home loans for Black Americans and other minority groups.

“Even if Wells Fargo did not violate the law, its practice of dividing Americans based on race is immoral, unethical and un-American,” HUD Secretary Scott Turner said in a statement. “Wells Fargo and all of its employees that engaged in race-based decision-making should be ashamed of themselves.”

Wells Fargo declined to comment. The bank has been hit in recent years by allegations it discriminates against Black customers. The bank faced backlash after a Bloomberg report found it rejected half of all refinancing applications from Black families in 2020.

In the view of the Trump administration, these programs violate fair housing law and discriminate against other homebuyers. A senior HUD official told the Wall Street Journal the agency is reviewing similar initiatives at other financial institutions.

Fair housing advocates say the Wells Fargo program was created under federal rules that expressly allowed it.

"Congress wrote Special Purpose Credit Programs (SPCPs) into federal law 50 years ago to enable lenders to adopt programs to remedy the effects of historic barriers and exclusions from the lending market based on gender, race and national origin," Nikitra Bailey, executive vice president of the National Fair Housing Alliance, said in a statement.

"Investigating a bank for following the government's own rules to create paths to address longstanding discrimination in lending is an abuse of the agency’s investigative authority and a transparent attempt to scare every lender in the nation away from their legal obligation to serve underserved communities," she said.

Wells Fargo pledged $150 million to reduce mortgage rates and refinancing fees for qualifying Black homeowners. HUD accused Wells Fargo of dividing Americans by race in violation of the Fair Housing Act, a civil rights-era law prohibiting discrimination based on factors such as race.

“Attempting to close statistical racial gaps in homeownership by doling out loans based on race is no way to do business,” Trainor wrote. “And doing so in residential real estate-related transactions is illegal under the Fair Housing Act.”

The investigation into mortgage lending practices to minority groups is a shot across the bow to financial institutions engaged in race-based lending practices that the Trump administration says proliferated during the Biden administration.

The Justice Department has launched antifraud probes into federal contractors, targeting DEI programs created after the 2020 murder of George Floyd. Since President Donald Trump’s election in 2024, many companies have walked away from these programs.

The Wells Fargo investigation not only marks a new chapter in the federal crackdown on corporate DEI initiatives, it exposes financial institutions to high-stakes government scrutiny and growing regulatory and legal risks.

Past administrations pressed banks to develop programs to close racial homeownership gaps. In 2024, less than a quarter of Black households owned the home they lived in compared with nearly three quarters of White households, according to the Pew Research Center.

Critics argue the administration is ignoring the legacy of government-backed redlining and restrictive covenants that barred Black and minority Americans from building wealth through homeownership. What's more, discrimination continues to unfairly limit access to homeownership as the nation faces an affordable housing crisis, they say.

“The Trump administration now appears increasingly interested in dismantling policies designed to acknowledge those consequences while invoking the language of equality to justify doing it,” citizen journalist George Cummings wrote on his "What Did Donald Trump Do Today?" Substack.