Reps. Horsford, Cleaver Demand Answers from Navy Federal Credit Union Following Reports of Alarming Racial Disparities in Mortgage Lending
January 12, 2024
WASHINGTON – Today, Congressman Steven Horsford (NV-04), Chairman of the Congressional Black Caucus (CBC), and Congressman Emanuel Cleaver, II (MO-05), Ranking Member of the Subcommittee on Housing and Insurance, and led a cohort of fellow lawmakers from the CBC demanding answers from Navy Federal Credit Union (Navy Federal) following reports of significant racial disparities in mortgage approval rates. Last month, it was reported that Navy Federal, the largest credit union in the nation, has the widest disparity in mortgage approval rates between White and Black borrowers of any of the top 50 lenders originating mortgages last year.
In a letter to Navy Federal President and CEO Mary McDuffie, the lawmakers wrote:
“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. 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 lawmakers continued:
“Navy Federal should explain its increasingly widening racial lending gap and how more than half of the Black service members, veterans, and their families who applied for a conventional mortgage in 2022 were rejected and denied homeownership and wealth building opportunities.”
Homeownership is the primary way in which most Americans build wealth. 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.
The lawmakers requested that Navy Federal meet with lawmakers by January 31st to explain its increasingly widening racial lending gap and how more than half of the Black service members, veterans, and their families who applied for a conventional mortgage in 2022 were rejected and denied homeownership and wealth building opportunities.
The lawmakers also requested information from Navy Federal responsive to the following questions:
- What steps is Navy Federal currently taking to determine the root cause, severity, duration, and pervasiveness of lending discrimination that may have occurred?
- To what extent are automated underwriting systems influencing approvals, terms, and conditions, and how does Navy Federal ensure that such systems used to assess creditworthiness don’t discriminate or produce disparate impacts?
- Please describe the elements of Navy Federal’s compliance management system designed to prevent mortgage underwriting discrimination including board of director and management oversight, the compliance program, and the compliance audit process.
- To what extent has Navy Federal evaluated alternatives to its current underwriting policies, practices, and procedures that would reduce any racial lending disparities while still achieving legitimate business needs?
- What does Home Mortgage Disclosure Act data, which is comparable and publicly available, say about Navy Federal lending to low- and moderate-income borrowers in relation to the other top 50 mortgage lenders in the United States?
- What Special Purpose Credit Programs does Navy Federal offer for the benefit of its members or an economically disadvantaged class of borrowers, if any?
- To what extent does Navy Federal prioritize diversity and inclusion in your institution, including but not limited to your management team and board?
The official letter from Reps. Horsford, Cleaver, and fellow lawmakers is available here.
Issues:Economy