VIENNA, Va.–A federal judge has dismissed a lawsuit filed against Navy Federal Credit Union over alleged bias in its mortgage lending.
Judge Leonie M. Brinkema of the United States District Court for the Eastern District of Virginia ruled in favor of Navy FCU in the litigation. The plaintiffs now have the option of filing an amended complaint.
As CUToday.info reported here, in March attorneys for Navy Federal Credit Union filed a motion for dismissal, arguing the “alleged statistical disparities” the plaintiffs have cited were not sufficient to prove discrimination, and that they “fail to identify any Navy Federal policy or practice that caused any disparity.”
Suit Followed Report
The lawsuit had been filed in the wake of a late 2023 report by CNN that alleged Navy Federal Credit Union had the widest disparity in mortgage approval rates between White and Black borrowers of any major lender, a trend that “reached new heights” (in 2022), that put the cases in motion.
The dismissal is not related to external review Navy Federal commissioned and released that it said found “no race-based decision making” in its underwriting of mortgages. That review was conducted by civil rights lawyer and former commissioner of the U.S. Commission on Civil Rights, Debo Adegbile, of the firm WilmerHale, who was retained by Navy FCU.
Attorneys with WilmerHale filed the motion to dismiss the litigation, but Adegbile’s analysis was not included in that motion.
In Violation of Agreement
In addition to the arguments above, WilmerHale’s motion on behalf of Navy FCU instead states the agreements the plaintiffs had signed when they became members of the credit union required them to give Navy Federal adequate notice before filing a lawsuit, and that most had not done so.
CNN reported that the plaintiffs’ attorneys, however--Ben Crump, Adam Levitt, and Hassan Zavareei – said in a statement that it was “a classic conflict of interest” for Adegbile to review Navy Federal’s practices at the same time his firm was defending the credit union in court.
‘Incomplete Analysis’
As CUToday.info reported earlier, Adegbile said in a statement accompanying the announcement of his review, “CNN’s analysis was incomplete, and the article’s suggestion that Navy Federal discriminates against its members is unsupported. In fact, our review found that when all relevant factors are controlled for, which CNN did not do, the difference in approval rates between Black and White borrowers falls to less than 1%. The remaining difference in approval rates is explained by legitimate, non-race factors like income verification and incomplete credit applications. Navy Federal is exploring opportunities to enhance its mortgage lending practices and drive further access to home ownership.”
CNN Response
In response, new news network stated, “As CNN previously reported, applicants’ credit scores are not available in the public mortgage data, and Navy Federal declined to provide CNN any data that would make it possible to analyze credit scores or other non-public factors. CNN’s analysis only included mortgage applications that were listed in the public data as being fully submitted and either approved or denied, and excluded those that were listed as ‘closed for incompleteness.’
“And while Navy Federal’s statement said its analysis included applicants’ debt-to-income ratios, CNN’s review also took those ratios, which are available in the public mortgage data, into account,” CNN added.
Navy FCU is also facing other lawsuits that were filed in the wake of the CNN report. Several congressional committees have also sent lists of questions to Navy FCU and demanded responses.
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