WASHINGTON–Members of the New Democrat Coalition and the Congressional Hispanic Caucus in Congress have sent separate letters to Navy Federal Credit Union CEO Mary McDuffie and to agencies and regulators across the federal government demanding answers to more than a dozen questions related to alleged mortgage lending bias at the credit union.
The letters are only the latest from Capitol Hill to the world’s largest credit union, which last week was the subject of a press conference led by the Rev. Al Sharpton and nationally known civil rights attorney Ben Crump at which a class action lawsuit against Navy FCU was announced. As CUToday.info has reported, another lawsuit was announced earlier, and other members of Congress have sent similar letters and made similar demands, including that hearings be held.
The letter from the New Democrat Coalition and the Congressional Hispanic Caucus was also sent to the Department of Housing and Development, U.S. Attorney General Merrick Garland, NCUA, the Department of Veterans Affairs, the Federal Housing Finance Agency, and the CFPB.
What Report Alleged
The letters and calls for investigation come in the wake of a CNN report that found Navy Federal Credit Union has the widest disparity in mortgage approval rates between White and Black borrowers of any major lender, a trend that “reached new heights” in 2022.
According to the report, 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 reported.
Navy FCU has responded by saying the data used for the analysis wasn’t complete and by announcing it had retained counsel to conduct an investigation of its own.
Questions for Navy Federal
In the letter from the congressional groups, the findings of the CNN report said if true, there a “variety of statutes and authorities implicated by this situation.
In the letter, the organization demanded answers to the following questions:
- As indicated in CNN’s HMDA analysis, Navy FCU’s disparities in mortgage approval rates have continued to widen since 2018. Have there been any changes in policy or procedures, such as those related to underwriting that may explain this? Would those changes have any impact on approval decisions?
- What are Navy FCU’s internal policies and practices for routinely assessing annual HMDA data in conjunction with other internal data to assess for potential fair lending risks? How does Navy FCU define routinely?
- Does Navy FCU contract with any third-party experts to test for potential fair housing and fair lending concerns across its financial counseling and mortgage loan application, underwriting, and approval processes?
- What, if any, is Navy FCU’s legitimate, non-discriminatory reason to explain the disparities in conventional and VA loans for Black and Latino mortgage applicants as identified in CNN’s investigation?
- What is Navy FCU’s legitimate business need for its current mortgage application, underwriting and approval procedures for conventional and VA loans? How has Navy FCU ensured that these policies and procedures, including any use of artificial intelligence, are non-discriminatory and adhere to federal fair housing and fair lending laws while still achieving Navy FCU’s business needs?
- What compliance systems does Navy FCU have in place for board and management, policies and processes, training, monitoring and audit and complaint systems?
- What are the numbers and percentages of Black and Latino employees in the following job categories for 2018-2023: Total workforce; First/Mid-Level Officials and Managers; Executive/Senior Level Officials and Managers.
- Does Navy FCU offer any Special Purpose Credit Program for the benefit of its members or a subset of its members? If so, what are they, and if not, why not?
- If Navy FCU discovers evidence of discrimination against its members, what is its policy and procedure to determine the root cause, severity, duration, and pervasiveness of the finding? What steps does it take to identify, notify, and remediate harmed consumers? What steps does it take to notify relevant Federal agencies?
Questions for Regulators
In its letter to the half-dozen regulators, the members of Congress posed these questions:
- How do your respective agencies use statistical analysis and other tools to identify fair lending risk and/or potential illegal discrimination in underwriting at credit unions? How often has the agency conducted such an analysis at a credit union?
- When a fair lending risk is identified, how does the agency ensure that a lender remedies such risk, including by searching for a less discriminatory alternative in the underwriting context?
- Do CFPB, NCUA, HUD, or the VA have reason to believe that Navy FCU has engaged in discrimination in mortgage underwriting on the basis of race or ethnicity in conventional or VA loans? Why or why not?
- Over the past 10 years, how many times have your respective agencies referred a credit union to the DOJ for potential violations under the ECOA of the FHAct?
- How does the Compliance Management System of Navy FCU, in your evaluation, control the risk of discrimination in underwriting?
- In the past 10 years, has the agency provided supervisory guidance to Navy FCU with respect to fair lending?
- How do your respective agencies view underwriting discrimination in the context of the Uniform Interagency Consumer Compliance Rating System?
- In the past 10 years, how many times have fair lending findings impacted the CFPB or NCUA’s ratings for a credit union?
- In the past 10 years, how have any fair lending findings impacted the agency’s ratings for Navy FCU?
- How do your respective agencies carry out its obligation to affirmatively further fair housing, especially as it relates to underwriting and lending?
- Since the CNN report was released, what have you done to ensure accountability with Navy Federal Credit Union?
- What actions will you take to help the families that may have been unjustly denied by Navy Federal Credit Union?