Call for Congressional Hearing on Navy Federal’s Mortgage Practices

Reps. Maxine Waters, Brad Sherman, Bill Foster, Emanuel Cleaver II, Joyce Beatty, Stephen Lynch, and Al Green have sent a letter to Rep. Patrick McHenry, Chairman of the House Committee on Financial Services, calling for an immediate hearing to address significant racial disparities in mortgage approval rates at Navy Federal Credit Union (NFCU), one of the largest credit unions in the nation.

A report from CNN found that Navy Federal—who primarily lends to military servicemen, veterans, and their families—approved more than 75% of borrowers who identified as white for new conventional home mortgage purchases in 2022 (the last year with published data from the Consumer Financial Protection Bureau), but less than 50% of African American borrowers who applied for the same type of loan were approved.

While the racial lending gap is nothing new among banks due to long held biases even after new legislation and programs within banks to offset these sentiments, the 29-percentage point in Navy Federal’s approval rate was the largest among the top 50 mortgage lenders in the country. The disparity remains even among White and Black applicants when they reported similar income and debt-to-income ratios. Notably, Navy Federal approved a slightly 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.

In the letter, the group states, “We write to request that you immediately schedule a Committee hearing on the significant racial disparities in mortgage approval rates at the privately run Navy Federal Credit Union (NFCU), the largest credit union in the United States. This information was brought to light in a recent analysis by CNN, which revealed alarming discrepancies in approval rates between White and Black borrowers, with NFCU displaying the widest gap among major lenders. These findings are especially troubling considering that, while about 13.6% of the U.S. population is Black and about 17% of the military is Black, almost 25% of NFCU’s membership is Black.”

In mid-January, U.S. Sen. Sherrod Brown, Chairman of the Senate Committee on Banking, Housing, and Urban Affairs, along with his colleagues, Sens. Ron Wyden, Chair of the Senator Finance Committee; Jack Reed, Chair of the Senate Armed Services Committee; Raphael Warnock; Tina Smith; John Fetterman; Tim Kaine; Chris Van Hollen; Catherine Cortez Masto; and Bob Menendez called on the U.S. Department of Housing and Urban Development (HUD) and the Consumer Financial Protection Bureau (CFPB) to review the concerning gap in mortgage approval rates by NFCU.

“As a private institution that bears the name of an esteemed branch of the United States military, Navy Federal Credit Union must explain both to Congress and its 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,” continued the letter from Rep. Waters and her coalition. “Despite pledging to keep diversity and inclusion as an area of focus on the Committee’s agenda and make it a component of every sub-panel when you disbanded the Subcommittee on Diversity and Inclusion, the Committee has yet to have a hearing focused on these issues since you stepped into leadership. We hope we can continue working together on these issues and respectfully request that you uphold your pledge and schedule a Committee hearing on racial disparities at Navy Federal Credit Union without delay.”

A spokesperson for Navy Federal Credit Union reached out to MortgagePoint and added, “Navy Federal is committed to serving each and every one of our members fairly, and we strive every day to expand economic opportunity and access to credit for our diverse community of members. Because these issues are core to who we are, we have also already initiated a review to assess our mortgage lending policies and practices. Black borrowers make up one in four of our members, and extending credit to qualified Black applicants and borrowers is a longstanding hallmark of our success. We are proud of the fact that Navy Federal ranks first among large lenders in the percentage of mortgage loans made to Black borrowers. We will continue to work to support all of our members–including Black borrowers–to help them build strong financial futures.”

Click here to read the full letter to Rep. McHenry.

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Eric C. Peck

Eric C. Peck

Eric C. Peck has 25-plus years’ experience covering the mortgage industry, most recently serving as Editor-in-Chief for National Mortgage Professional Magazine. He graduated from the New York Institute of Technology, where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books, and has served as Copy Editor for Entrepreneur.com.
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