Wells Fargo Advances as OCC Lifts 2021 Consent Order on Home Lending Issues

Significant Milestone in Regulatory Recovery Journey / Reuters

Wells Fargo has achieved a notable breakthrough in its long-standing efforts to resolve regulatory challenges, with the U.S. Office of the Comptroller of the Currency (OCC) terminating a 2021 consent order tied to deficiencies in the bank’s home lending loss mitigation practices. This development, announced by the Wall Street banking giant, underscores a pivotal moment in addressing issues that have lingered since the infamous 2016 fake accounts scandal, signaling progress under CEO Charlie Scharf’s leadership since 2019. The termination of this enforcement action, which initially came with a $250 million fine for failing to meet earlier compliance standards, marks the fifth consent order closed in 2025 alone and the eleventh since Scharf took the helm, reflecting a concerted push to improve Wells Fargo’s home lending compliance and overall risk management framework. For stakeholders tracking Wells Fargo regulatory updates, this step forward brings the bank closer to shedding nearly a decade of oversight, though challenges remain with three unresolved consent orders and a persistent $1.95 trillion asset cap imposed by the Federal Reserve.

The 2021 consent order stemmed from shortcomings in how Wells Fargo managed its home lending loss mitigation program, a critical area involving loan modifications, forbearance, and other measures to assist borrowers facing foreclosure risks. The OCC’s decision to lift this order suggests the bank has successfully overhauled these processes, aligning them with regulatory expectations and restoring confidence in its mortgage servicing operations. This progress is part of a broader narrative of recovery for Wells Fargo, which has been under intense scrutiny since revelations that employees created millions of unauthorized accounts to meet aggressive sales targets, a scandal that cost the bank billions in fines and triggered a cascade of enforcement actions. Under Scharf’s tenure, fixing compliance issues has been a top priority, with recent months showing accelerated momentum. Earlier in 2025, the Consumer Financial Protection Bureau (CFPB) terminated a 2022 order related to mishandling auto loans and mortgages, while the Federal Reserve lifted two 2011 orders in February tied to legacy mortgage and financial business issues. Additionally, last month, the OCC ended a 2018 order focused on compliance risk management, further evidencing Wells Fargo’s strides in strengthening its operational integrity.

Despite these advancements, the bank’s journey toward full regulatory freedom is not yet complete. Three consent orders remain active, though specifics are less detailed in public statements, likely encompassing ongoing compliance and consumer protection concerns from the OCC, CFPB, and Federal Reserve. The most significant hurdle continues to be the Federal Reserve’s $1.95 trillion asset cap, enacted in 2018 to curb growth until regulators are satisfied with the bank’s risk management overhaul. This restriction has limited Wells Fargo’s ability to expand its balance sheet, costing it potential profits in a competitive banking landscape, and its removal hinges on resolving all outstanding issues. Analysts from Piper Sandler noted that this latest OCC action is another indicator that Wells Fargo is shifting from a defensive posture to a proactive stance, potentially hastening the asset cap’s lifting. Such optimism is reflected in the market, with Wells Fargo stock prices rising 0.2% in extended trading following the announcement, a modest yet telling sign of investor confidence in the bank’s regulatory turnaround strategy.

Delving deeper into the implications, the termination of the 2021 consent order highlights Wells Fargo’s efforts to enhance its home lending loss mitigation practices, a key component of its mortgage servicing operations that affects thousands of borrowers annually. Effective loss mitigation is vital for preventing foreclosures, offering solutions like payment deferrals or loan restructurings, and the OCC’s approval suggests these systems now meet stringent federal standards. This achievement not only reduces regulatory risk but also positions Wells Fargo to rebuild trust with customers impacted by past mismanagement. For investors, the steady closure of consent orders, five in 2025 alone, strengthens the case that the bank could soon operate without the asset cap, unlocking growth opportunities in lending and deposits. CEO Scharf emphasized the bank’s commitment to completing the work on remaining orders, projecting confidence in a swifter resolution that could see Wells Fargo fully unshackled from its regulatory past within the year, a sentiment echoed by analysts predicting a potential cap lift by mid-2025.

The broader context of Wells Fargo’s regulatory saga offers valuable insights for those researching banking compliance trends. Unlike peers such as JPMorgan Chase, which have faced fines but avoided growth-limiting measures, Wells Fargo’s asset cap stands out as a rare and severe penalty, underscoring the depth of its prior failures. Recent progress, however, aligns with a softening regulatory environment, as noted by industry observers, potentially influenced by shifts in federal oversight priorities. For customers, improved home lending practices could translate to better support during financial distress, though day-to-day banking services are unlikely to see immediate changes. Meanwhile, the bank faces ongoing scrutiny, with recent OCC actions citing anti-money laundering weaknesses, suggesting that while the home lending chapter may be closing, other compliance areas require attention. This multifaceted recovery effort illustrates the complexity of restoring a major financial institution’s reputation and operational freedom.

For those seeking a detailed Wells Fargo regulatory compliance update, this milestone is a testament to the bank’s persistent focus on rectifying past mistakes. The termination of the 2021 consent order, coupled with earlier closures, paints a picture of a bank steadily reclaiming its standing. Yet, the remaining three consent orders and the asset cap serve as reminders that the finish line is near but not crossed. Stakeholders, from investors eyeing stock performance to regulators assessing systemic risk, will closely watch the Federal Reserve’s next moves, as lifting the cap requires a board vote contingent on comprehensive compliance. With shares showing slight gains and analysts forecasting an earlier-than-expected resolution, Wells Fargo’s trajectory suggests a pivotal year ahead, balancing regulatory redemption with renewed growth potential in the competitive U.S. banking sector.