VIENNA, Va.–Navy Federal Credit Union has issued an updated statement in response to a report alleging it has the widest disparity in mortgage approval rates between White and Black borrowers of any major lender, saying the report is inaccurate and excludes important data.
As CUToday.info reported here, CNN said its analysis of home mortgage lending data found the $165-billion Navy Federal approved more than 75% of the White borrowers who applied for a new conventional home purchase mortgage in 2022, but less than 50% of Black borrowers who applied for the same type of loan, based on the most recent data available from the Consumer Financial Protection Bureau.
CNN further said its examination found the nearly 29-percentage-point gap in Navy Federal’s approval rates was the widest of any of the 50 lenders that originated the most mortgage loans during 2022.
“The disparity remains even among White and Black applicants who had similar incomes and debt-to-income ratio,” CNN said in its report.
Statement Issued
In response, the credit union published a statement on its website stating, “Navy Federal was recently included in a news story about lending practices in the mortgage industry. We care deeply about this issue and want you to know the report does not accurately reflect our lending practices and is rooted in an incomplete analysis of lending data that does not account for major criteria required by any financial institution to approve a mortgage loan. We proudly provide a higher percentage of mortgage loans to Black applicants than the vast majority of the top 50 mortgage originators nationwide.
“Our members put their faith in us to do right by them financially, and we stand by the promise that we are abiding by all fair lending practices,” the statement continued.
Additional Findings
CNN said its analysis also found:
- Navy Federal approved a slightly higher percentage of applications from White borrowers making less than $62,000 a year than it did of Black borrowers making $140,000 or more.”
- Black applicants to Navy Federal were more than twice as likely to be denied as White applicants even when more than a dozen different variables – including income, debt-to-income ratio, property value, down payment percentage, and neighborhood characteristics – were the same.
- CNN said the credit union rejected about 3,700 Black applicants for home purchase mortgages during 2022, “potentially blocking them from homeownership just as interest rates spiked.”
- Navy Federal also approved Latino borrowers at significantly lower rates than White borrowers.
Earlier Navy Federal Response
In a statement last week to CNN as part of the response, 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.”
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.
CNN noted that information is not available in the public mortgage data, and reported that Navy Federal declined to release additional data about its loans that included borrowers’ credit scores or other variables. In addition, CNN said, most of the Navy Federal applications that were denied are listed as being rejected for reasons other than “credit history.”
CUToday.info has also reached out to Navy Federal for comment.
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