VIENNA, Va.–Just days after a national report alleged bias in its mortgage lending, a lawsuit has been filed against Navy Federal in federal court claiming the credit union discriminated against Black and Latino mortgage applicants.
In addition, a prominent member of Congress is also weighing in on the issue.
As CUToday.info reported, CNN said its analysis of national mortgage lending data found Navy Federal approved more than 75% of the White borrowers who applied for a new conventional home purchase mortgage in 2022, based on the most recent data available from the Consumer Financial Protection Bureau. But less than 50% of Black borrowers who applied for the same type of loan were approved, CNN also reported.
CNN said it found a nearly 29 percentage-point gap between the credit union’s rate of acceptance for Black mortgage applicants (48.5%) in 2022, compared with White applicants (77.1%). Latino applicants fared only slightly better than Blacks in the CNN analysis, at 55.8% acceptance.
What Suit Alleges
The class-action suit filed against the $165-billion Navy Federal claims the credit union has violated the Fair Housing Act and the Equal Credit Opportunity Act in allowing the lending disparity.
The lawsuit cites statistics in the CNN report, including that Navy Federal approved a higher percentage of applications from White borrowers making less than $62,000 a year than it did from Black borrowers making $140,000 or more.
“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 argues, according to a report in BankingDive. “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.”
Congressional Attention
Meanwhile, Rep. Maxine Waters (D-CA), the ranking member of the House Financial Services Committee, said she is requesting the CFPB and NCUA “promptly investigate this matter” and for Navy Federal to justify its lending decisions.
“As a private institution that bears the name of an esteemed branch of the United States military, 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. "Its leadership should also share to what extent they prioritize diversity and inclusion, including on their management team and board, as well as in their hiring, promoting, and contracting practices.”
Review Being Conducted
As CUToday.info reported here, Navy Federal Credit Union said this week, “We treat the recent allegations very seriously, and we have retained a leading civil rights lawyer, Debo P. Adegbile, former commissioner on the United States Commission on Civil Rights, and his team to assess our mortgage lending policies and practices and make recommendations to drive further access to home ownership.”
Earlier, in a statement to CNN, Navy Federal spokesperson Bill Pearson said, “Navy Federal Credit Union is committed to equal and equitable lending practices and strict adherence to all fair lending laws. Employee training, fair lending statistical testing, third-party evaluations, and compliance reviews are embedded in our lending practices to ensure fairness across the board.”
Incomplete Information Alleged
Pearson further told CNN the news outlet’s analysis “does not accurately reflect our practices” because it did not account for “major criteria required by any financial institution to approve a mortgage loan.”
Those factors included “credit score, available cash deposits and relationship history with lender,” he said.
Trade Groups Issue Statement
Three credit union trade groups also issued a statement in response to the CNN report, calling its findings “misleading.”
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