BusinessCongressional Leaders Grapple with Navy Federal Credit Union's Racial Disparities in Mortgage...

Congressional Leaders Grapple with Navy Federal Credit Union’s Racial Disparities in Mortgage Approvals

Congressional Black Caucus members convened with Navy Federal Credit Union’s CEO Mary McDuffie on Thursday to address ongoing concerns raised by recent media reports that revealed significant racial disparities in the lender’s mortgage approval rates.

Specifically, published reports indicate that Navy Federal approved over 75% of white borrowers for new conventional mortgages, while less than 50% of Black borrowers received approval for identical loans.

Reps. Steven Horsford (D-Nev.) and Emanuel Cleaver (D-Mo.) co-authored a letter, supported by 38 Congressional Black Caucus colleagues, urging McDuffie to address the issues raised in the media reports. 

“We are naturally concerned to learn that Navy Federal, the nation’s largest credit union, approved a 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,” the letter stated. “It is reported that while more than 75% of white borrowers who applied for a new conventional home purchase mortgage in 2022 were approved, Navy Federal approved less than 50% of applications for the same type of loan from Black borrowers.”

The meeting with Navy Federal officials at the Rayburn House Office Building in Washington, D.C., sought answers to the questions posed by Congress members but left them dissatisfied with McDuffie’s responses.

In the meeting, which lasted about an hour, McDuffie engaged with three members of the Congressional Black Caucus, including Horsford, Cleaver, and Rep. Sydney Kamlager-Dove of California. The focus was on probing Navy Federal’s mortgage practices, which have come under increased scrutiny due to the stark racial disparities revealed in a CNN investigation.

Navy Federal, the nation’s largest credit union with over 13 million members catering to military service members, defense personnel, veterans, and their families, has faced heightened Congressional attention over the report. Horsford, meanwhile, emphasized the broader goal of closing the racial wealth gap in America.

“You cannot do that with practices like this that deny equal opportunity to homeownership,” he asserted.

Analysts found a notable gap of nearly 29 percentage points in approval rates between white and Black borrowers at Navy Federal, even after accounting for various factors such as income, debt-to-income ratio, and property value. The credit union hired a civil rights lawyer in December 2022 to review its mortgage practices and committed to making recommendations for enhanced access to homeownership.

Horsford expressed dissatisfaction with the vague responses from McDuffie regarding the timeline of the review. He emphasized the urgency to address discriminatory practices affecting servicemembers, particularly those from Black or Latino backgrounds.

Navy Federal has contested CNN’s analysis, arguing it was incomplete and did not consider applicants’ credit scores, available cash deposits, or relationship history with the lender. The credit union declined to provide additional data for analysis. Despite Navy Federal’s claim that a higher percentage of its mortgage loans go to Black borrowers compared to other large lenders, Congress members highlighted the critical issue of denials.

Several Democrats on the House Financial Services Committee, including Cleaver and Rep. Maxine Waters (D-Calif.), have requested a hearing on the racial disparities in Navy Federal’s mortgage lending. Additionally, 10 Democratic senators have urged federal regulators to examine Navy Federal’s practices.

Navy Federal is also contending with a federal class-action lawsuit from mortgage applicants who allege discrimination. Last month, a judge consolidated three separate lawsuits against the credit union into a single case, intensifying the pressure on Navy Federal to address and rectify the alleged discriminatory practices.

“Homeownership is the primary way in which most Americans build wealth,” Horsford stated. “However, throughout history, Black Americans have both been denied the opportunity to own a home and denied the full benefits of homeownership, such as the ability to purchase a home in the neighborhood of choice, due to discriminatory policies. While Congress has passed legislation like the Fair Housing Act, Equal Credit Opportunity Act, and the Civil Rights Act to root out discrimination, present-day forms of housing discrimination remain persistent today.”

Source: Washington Informer

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