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Navy Federal Credit Union is facing two lawsuits, and lawmakers are demanding that its loans be rejected following a CNN analysis that concluded the agency denied more than 50% of Black mortgage applicants in 2022. It is calling for an investigation into its practices.
CNN analysis According to Home Mortgage Disclosure Act (HMDA) data, Navy Federal approves 77.1 percent of white applicants and 48.5 percent of black applicants, ranking it among the nation’s 50 largest mortgage lenders. It turned out to be “by far the biggest difference.” CNN said the approval gap between black and white applicants remains even when variables such as the applicant’s income, debt-to-income ratio, property value and down payment are taken into account.
Navy Federal says it has a “longstanding commitment to expanding credit and economic opportunity for Black borrowers,” and CNN’s analysis includes factors not available in HMDA data, such as credit scores and borrower assets. He said that he had not done so.
and 13.2 million members Navy Federal is the nation’s largest credit union with $168.4 billion in assets under management. The company is also a national leader in lending to Black communities, servicing $3.5 billion in home loans and ranking No. 1 among large financial institutions in percentage of loans made to Black borrowers in 2022. states that it has been done.
“We take the recent allegations very seriously and will evaluate our mortgage policies and practices to promote greater access to homeownership,” Navy Federal said in a statement. statement.
CNN’s Dec. 14 article sparked two federal lawsuits seeking class action status in Virginia on behalf of black borrowers who were denied loans by the Navy federal government. Lawyers for the credit unions have not filed a response to the lawsuit, but the lawsuits are expected to be consolidated.
Meanwhile, 50 members of Congress have signed two letters demanding answers from the Navy and asking the Department of Housing and Urban Development (HUD) and the Consumer Financial Protection Bureau (CFPB) to investigate the allegations.
“While it is appropriate for a lender to deny a mortgage application if the borrower cannot afford the loan, that decision is based on the borrower’s ability to repay the loan,” the 10 Democrats on the Senate Banking Committee said. Ta. I wrote a letter to HUD and the CFPB.. “Needless to say, a person’s race or other protected characteristic should not be a factor.”
The Jan. 11 letter comes after CNN reported that Navy Federal approves only 55.8% of mortgage applications submitted by Hispanic applicants, who are 85% more likely to be denied a loan than white applicants. He also mentioned that.
“If a financial institution’s denial rate for black and Hispanic applicants appears to be significantly higher than the national average and higher than interest rates for similarly situated white borrowers, then its mortgage lending practices are “It raises questions about compliance with the law and the Fair Lending Act,” and regulation is needed, the senators said.
in another letter On Thursday, 50 members of the Congressional Black Caucus demanded answers from Navy Federal President and CEO Mary McDuffie.
“If your institution believes that the CNN analysis does not incorporate data not included in public mortgage data, such as credit scores, available cash deposits, and lender relationships, it is not an accurate representation.” I understand what you’re thinking.” [Navy Federal] ” wrote members of the Congressional Black Caucus. “However, even by looking at factors not included in the data disclosed by HMDA, we can convincingly demonstrate the extreme disparities found across the data we examine, including unusual disparities in income and debt-to-income ratios. It cannot be justified.”
The 50 members describe themselves as “long-time champions of credit unions and their missions” and are committed to “better understanding how homeownership opportunities and benefits are enjoyed equitably among the institution’s members.” We have requested a meeting with Mr. McDuffie by the end of this month to do so.”
Navy Federal was previously named as one of the seven financial institutions with the highest disparities for applicants of color in an analysis of 2019 HMDA data by nonprofit newsroom The Markup. . All of these lenders told The Markup that they comply with fair lending laws.
Fair lending laws are a top priority for the Department of Justice, and since announcing its anti-redlining initiative in October 2021, the department has reached settlements totaling more than $107 million with 10 lenders.
Attorney General Merrick Garland said in October that the Justice Department is conducting more than 20 active investigations into redlining in neighborhoods across the country.
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