Navy Federal, the largest credit union in the U.S., is facing a class-action lawsuit alleging discrimination against Black and Latino applicants, violating the Fair Housing Act of 1968 and the Equal Credit Opportunity Act, which outlaws lending discrimination based on race.
Last week, CNN published an analysis which found that Navy Federal Credit Union green-lit home loan applications for 75% of the white borrowers, but less than 50% of Black borrowers who applied for the same loans were approved.
“When describing its corporate values, 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 reads. “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.”
We are hearing from Black customers who suffered discrimination from Navy Federal Credit Union (NFCU) – American’s largest credit union. A blockbuster CNN report found that NFCU approved 75% of White applicants for REFIS and HELOCS while denying more than 50% of Black applicants.…
— Ben Crump (@AttorneyCrump) December 16, 2023
While it is widely known that banks offer home loans to Black loan-seekers at a lesser rate, CNN’s analysis found that the nearly 29-percentage-point gap in Navy Federal’s approval rates was the widest of any of 2022’s Top 50 mortgage lenders.
To make matters worse, Navy Federal also approved a slightly higher percentage of applications from white borrowers earning less than $62,000 a year than it did for Black borrowers making $140,000 or more.
The report sparked national outrage.
“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,” Rep. Maxine Waters, urging the Consumer Financial Protection Bureau and National Credit Union Administration to “promptly investigate this matter.”
“The statistics in the article do not appear to have considered several key credit criteria that all financial institutions, including Navy Federal, rely on to assess mortgage applications,” the credit union said in a statement obtained by TheHub.news, with a spokesperson for Navy Federal, listing “credit score, available cash deposits and relationship history with lender” as some of those factors.
This Navy Federal situation is why I stand by the belief that telling folks to “stop buying lattes” is not the answer to their financial needs.
— Tamara Wilkerson Dias, EdD (@DrTamaraWDias) December 15, 2023
It’s always deeper than that. Discrimination is all throughout these financial institutions.
The lawsuit names two plaintiffs and seeks to represent all non-white Navy Federal residential loan applicants between 2018 and now whose applications were denied, approved at higher interest rates, processed at a slower rate or subject to less favorable terms than similar non-minority applicants.
