The nation’s largest credit union is under fire for allegedly denying Black mortgage applicants at a significantly higher rate than white mortgage applicants.
Two lawsuits take aim at Navy Federal Credit Union following an investigation into its lending practices, Inman reported. The two federal lawsuits, filed in Virginia, are seeking class-action status on behalf of Black borrowers denied loans by the credit union. The cases will likely be consolidated.
The federal government is also taking an interest in Navy Federal’s lending. Fifty members of Congress have signed letters seeking more information from the credit union and demanding investigations by the Department of Housing and Urban Development and the Consumer Financial Protection Bureau. They have asked to meet Navy Federal’s President and CEO Mary McDuffie “to better understand how homeownership opportunities and its benefits are enjoyed equitably among members of your institution.”
Last month, CNN analyzed Home Mortgage Disclosure Act data and found that Navy Federal approved only 48.5 percent of Black mortgage applicants in 2022, compared to 77.1 percent of white mortgage applicants. That was “by far the largest gap” among the country’s 50 largest mortgage lenders.
Hispanic applicants were also 85 percent more likely to be denied for a loan by Navy Federal than white applicants, according to the analysis.
Navy Federal has defended its commitment to Black lenders and pushed back against CNN’s analysis, saying the report did not factor in credit scores and borrower assets, which are not included in HMDA data. Navy Federal said it ranked first among large lenders in the percentage of loans made to Black borrowers two years ago.
A previous analysis of HMDA data for 2019 by The Markup also found Navy Federal to be one of the lenders with the widest disparities for applicants of color.
Discrimination in mortgages is nothing new in the country, barring Black families from securing necessary loans to acquire homes and building generational wealth. In 2020, for instance, Wells Fargo turned down nearly half of refinance applications sent in by Black homeowners.
It’s not clear if the Department of Justice will tackle the alleged practices at Navy Federal. Since launching an initiative in October 2021 to emphasize fair lending laws, the DOJ has reached more than $107 million worth of settlements with lenders who were found to be guilty of discrimination.
— Holden Walter-Warner
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