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Largest Credit Union in America Rejects More Than 50% Of Black American Mortgage Applications, Approves 75% Of White

Largest Credit Union in America Rejects More Than 50% Of Black American Mortgage Applications, Approves 75% Of White

credit union

Photo by Yan Krukau

The largest credit union in the U.S., Navy Federal Credit Union, has come under scrutiny following a CNN investigative report revealing significant racial disparities in its mortgage lending practices. A class-action lawsuit has been filed against the lender, alleging discrimination against Black and Latino applicants. Additionally, a senior congressional Democrat has demanded answers about the credit union’s practices.

The lawsuit, filed in federal court in Virginia, accuses Navy Federal Credit Union of systematic discrimination in housing, which violates federal law. This legal action comes after CNN found that the credit union had the widest disparity in conventional mortgage approval rates between white and Black borrowers among major lenders in the previous year.

Navy Federal Credit Union, known for its services to military service members, defense personnel, veterans, and their families, approved over 75 percent of white borrowers’ applications for conventional home purchase mortgages in 2022, according to Consumer Financial Protection Bureau data. However, less than 50 percent of Black borrowers who applied for the same type of loan received approval, CNN reported.

CNN’s analysis revealed that the nearly 29-percentage-point gap in approval rates at Navy Federal was the widest among the 50 largest mortgage lenders. Even after considering various factors such as income, debt-to-income ratio, property value, and down payment percentage, this disparity persisted.

The credit union rejected approximately 3,700 Black applicants for home purchase mortgages in 2022.

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Representative Maxine Waters, the ranking Democratic member of the House Financial Services Committee, called on Navy Federal to explain its practices to Congress, correct the harm done, and hold management accountable. Waters urged the Consumer Financial Protection Bureau and the National Credit Union Administration, federal regulators overseeing Navy Federal, to investigate.

“Navy Federal must explain both to Congress and their members how such practices took place, what immediate steps are being taken to correct the harm done, and who in management will be held responsible,” Waters said.

The lawsuit, filed by multiple law firms, including that of civil rights attorney Ben Crump, highlights the stories of two named plaintiffs whose mortgage applications were denied by Navy Federal. Cherelle Jacob, a 40-year-old Black resident of Washington state, and Laquita Oliver, a 44-year-old Black resident of Miami Dade County, Florida, both had strong financial backgrounds and good credit scores but were denied mortgages by the credit union.

Navy Federal Credit Union is accused of violating the Fair Housing Act of 1968 and the Equal Credit Opportunity Act, both of which prohibit lending discrimination based on race. The lawsuit seeks to represent a class of potential plaintiffs encompassing all Navy Federal minority residential loan applicants from 2018 through the present who faced denials, approvals at higher interest rates, less favorable terms, or slower processing compared to similar non-minority applicants.

Navy Federal Credit Union spokesperson Bill Pearson defended the institution’s lending practices, emphasizing their commitment to equal and equitable lending practices. However, critics argue that the racial disparities in Navy Federal’s approval rates are alarmingly significant and warrant further investigation.

“When describing its corporate values, Navy Federal claims that it ‘champions community,’ and that it is ‘dedicated…to embracing and celebrating diversity and inclusion in all the communities’ it serves,” the complaint, which cites CNN’s reporting, states. “But Navy Federal’s claims of community support are meaningless in the face of its actions: systematic discrimination in housing, in violation of federal law.”

Photo by Yan Krukau: https://www.pexels.com/photo/a-frustrated-businessman-in-front-of-a-laptop-7793650/