Dozens of House Democrats called for an investigation Wednesday into Navy Federal Credit Union, the nation’s largest credit union, over recent allegations it discriminated against nonwhite mortgage applicants—claims the company denied.
Legislators seek answers after recent reports of racial disparities in mortgage approval rates.
Twenty-one lawmakers from the the center-left New Democrat Coalition and the Congressional Hispanic Caucus urged federal regulators, including Attorney General Merrick Garland, to investigate the allegations, which were first leveled by CNN last year.
A separate letter to CEO Mary McDuffie indicated concerns the credit union, which lends to veterans and active servicemembers, discriminated against applicants “on the basis of race and national origin,” citing a Dec. 14 report from CNN that analyzed Consumer Financial Protection Bureau data and found disparities in mortgage approval rates between applicants of color and white applicants.
Lawmakers noted that while CNN’s report did not prove the lender discriminated, it showed “a potential pattern of disparate treatment that warrants further questioning and investigation,” later citing two past complaints.
The lawmakers are urging regulators to investigate whether or not the NFCU violated provisions of the Equal Credit Opportunity Act and Fair Housing Act—as well as provide insight into a dozen questions, including how respective agencies “identify fair lending risk and/or potential illegal discrimination in underwriting” at credit unions.
The NFCU said in a statement to Forbes a preliminary analysis suggests that the “difference in approval rates drops to around 1%” when accounting for other factors considered in home loan approvals, such as “credit score, verified income, and property information.”
$170.8 billion. That’s how much the NFCU has in assets, according to corporate data last updated Dec. 31.
Founded in 1933 during the Great Depression, the “military-focused” NFCU now serves 13.4 million servicemembers and veterans with its 355 global branches—though it has been subject to complaints in the past. In 2016, the Consumer Financial Protection Bureau ordered it to pay $28.5 million for improper debt collection amounts. A 2021 report from The Markup found similar disparities reported by CNN two years later. The lender announced on Dec. 19 it was “closely examining the allegations” from CNN’s report and retained Debo P. Adegbile, former commissioner on the U.S. Commission on Civil Rights, to assess its lending policies. Following CNN’s report, a lawsuit was filed in a Virginia federal court against the NFCU on behalf of two Black plaintiffs who had mortgage applications denied. The lawsuit alleges the lender violated the Equal Credit Opportunity Act and Fair Housing Act through the rejections.
The New Democrat Coalition and Congressional Hispanic Caucus are not the first lawmakers question NFCU. Last month, another group of legislators called on the Department of Housing and Urban Development and the Consumer Financial Protection Bureau to review the reported disparities.
The nation’s largest credit union rejected more than half its Black conventional mortgage applicants (CNN)
Class action lawsuit alleging discrimination filed against Navy Federal after CNN exclusive report (CNN)
Dozens of Mortgage Lenders Showed Significant Disparities. Here Are the Worst (The Markup)