It approved mortgages for White borrowers at a much higher rate
An analysis by CNN has found that Navy Federal Credit Union (NFCU), an Armed Forces bank, has been approving the mortgage applications of significantly more of its White borrowers than its Black borrowers, as reported in an article by the Michigan Chronicle.
According to the analysis, the credit union approved over 75% of its White applicants for new conventional home purchase mortgages in 2022. However, it approved less than 50% of black borrowers who applied for the same loan.
Racial discrimination in lending practices
The analysis by CNN also found that the disparity was present among both White and Black applicants who had similar incomes as well as debt-to-income ratios, with the credit union approving more applications from White borrowers who earned less than $62,000 a year in contrast to Black borrowers earning more than $140,000.
Black applicants were also found to be more than twice as likely to be denied than White applicants even when variables such as income, debt-to-income ratio, property value, downpayment percentage, and neighborhood characteristics were the same.
However, Bill Pearson, NFCU’s spokesperson denied the allegations of racial discrimination in its lending practices.
“Navy Federal Credit Union is committed to equal and equitable lending practices and strict adherence to all fair lending laws,” said Pearson.
“Employee training, fair lending statistical testing, third-party evaluations, and compliance reviews are embedded in our lending practices to ensure fairness across the board,” he added.
Pearson also claimed that the analysis did not accurately reflect the credit union’s practices because it did not take credit score, available cash deposits, and relationship history with the lender into account.
NFCU also declined to release additional data, according to the report.
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