According to a Dec. 14 CNN report, the Navy Federal Credit Union, the largest credit union in the United States, denied more than 50% of Black applicants for new conventional home mortgages in 2022, even as it had an approval rate greater than 75% for white applicants seeking the same product. According to that report, among all major lenders last year, Navy Federal was responsible for the widest disparity in approval rates between Black and white borrowers.
Among all major lenders last year, Navy Federal was responsible for the widest disparity in approval rates between Black and white borrowers.
That CNN report found that “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, downpayment percentage, and neighborhood characteristics — were the same.”
CNN, whose report is based on its analysis of public data made available through the Consumer Financial Protection Board, also found wide disparities between Latino borrowers and white ones.
A class-action lawsuit was quickly filed against the credit union alleging that it had discriminated against Black and Latino applicants, and Rep. Maxine Waters of California, the ranking Democrat on the House Financial Services Committee, said in a statement that “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 is right to call for an examination of the practices that contribute to those racial disparities. However, the problem with calling one lender on the carpet is that it often lets industry practices off the hook. Waters’ call must go out to the entire housing industry, not just one financial institution.
Where there’s smoke, there’s fire, and when it comes to discrimination in lending, racial…
Read the full article here