A mortgage discrimination case that began with two plaintiffs in December was consolidated in late February with seven others to form a class action lawsuit alleging that Navy Federal Credit Union — the nation’s largest with 13.4 million members and $170.8 billion in assets — “systematically and intentionally discriminates against minority borrowers across the United States.”
The lawsuit alleges that Navy Federal, which serves current and former military members from all service sectors, denied loans for 52% of Black borrowers and 44% of Latino borrowers, while denying only 23% of white applicants for home mortgage purchase or refinance loans and Home Equity Lines of Credit.
Affidavits of affected borrowers told stories of the financial and emotional distressed caused by qualified loan applicants having to find alternative — and often more costly — financing after being denied by their member-owned credit union.
The lawsuit, led by nationally known attorney Ben Crump and his associate Adam Levitt, said the lender’s own data show that Navy Federal approved loans for a higher percentage of white borrowers annually earning less than $62,000 a year than for Black loan applicants earning $140,000 or more.
And when Navy Federal did approve a loan to a Black or Latino applicant, they often were offered worse interest rates and loan terms than those offered to white borrowers with similar financial profiles. These activities are illegal under federal laws, including the Fair Housing Act and Equal Credit Opportunity Act (ECOA).
“The outright discrimination that occurs when Banking While Black continues to reveal itself in the lending practices of many of America’s largest financial institutions,” Crump said. “It is shameful that Navy Federal, an organization that prides itself in helping the families of men and women who served their country, does not give their Black and Latino customers the same opportunities as white customers.”
“We hope this legal action will stop racial lending discrimination in its tracks and require Navy Federal to right their wrongs,” said Adam Levitt. “Home ownership is recognized as the cornerstone of the American Dream. We will not sit by while that dream is denied to hard-working and deserving Americans based on discriminatory practices and algorithms.”
Navy Federal said in a December 2023 statement that its more than $3.5 billion in mortgages to Black borrowers in 2022 shows its “longstanding commitment to expanding credit and economic opportunity to Black borrowers.”
But the number of people calling to hold Navy Federal accountable is growing, and now includes civil rights activist Rev. Al Sharpton, 10 U.S. senators, over 20 members of Congress, consumer advocates and others.
Congresswoman Maxine Waters, ranking member of the House Financial Services Committee called for federal agencies to begin investigations.
“Credit unions are owned by their members and while this type of discrimination may be par for the course for a profit-driven megabank, a member-driven credit union should know better,” said Waters.
“As a private institution that bears the name of an esteemed branch of the United States military, Navy Federal must explain both to Congress and their 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,” Waters continued. “These abuses will not be tolerated, and I urge the Consumer Financial Protection Bureau, National Credit Union Administration, and other appropriate agencies to promptly investigate this matter.”
Consumers Union, a nonprofit advocacy group, added its support.
“The large racial disparity found between loan approvals for applicants with roughly the same financial profile raises serious concerns that Navy Federal may be unfairly discriminating against Black and Latino applicants,” said Jennifer Chien, CU’s senior policy counsel for financial fairness.
In a joint letter on Jan. 11, 2024, 10 U.S. senators led by Senate Banking Committee Chair Sherrod Brown urged the CFPB Consumer Financial Protection Bureau and Department HUD to investigate the issue:
“As the regulators with primary responsibility for enforcing ECOA and the Fair Housing Act, we ask that you thoroughly review Navy Federal’s mortgage lending practices and outcomes for compliance with all federal fair housing and fair lending laws and regulations. Navy Federal’s members have made countless sacrifices in their service to our country. We must do all we can to ensure illegal barriers are not placed on their path to homeownership.”
Even more lawmaker support came on Feb. 28 in a joint letter from the Congressional Hispanic Caucus and the New Democrat Coalition that called upon six federal agencies to investigate and report on their findings.
“[T]he federal financial regulators have a duty to ‘affirmatively further fair housing,’ which means they must take meaningful actions that overcome and do not further entrench patterns of segregation and systemic disinvestment, such as through redlining, based on protected classes under the law,” wrote the lawmakers.
Charlene Crowell is a senior fellow with the Center for Responsible Lending. She can be reached at Charlene.crowell@responsiblelending.org.
This news is disgusting. I have been a member of NFCU for 15 years and I will be thinking about moving my money elsewhere.
Assuming they have bad credit is racist in itself half the comments are defending what is clear discrimination I have been since I was in my 20s I have never been approved for any loan but I bought my second home in 2020 and have an excellent interest rate I have said for years they discriminate against me
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I am as well. I am a disabled, brain damaged Retired U.S. Army soldier, and I have never dealt with a bank lime this. I have gone thru HELL because of them!
Well they didn’t mention anything about their credit ratings. Doesn’t matter how much you make if your credit it bad you will pay more. That happens to everyone. No discrimination. Another reason why the color of someone’s skin should be stricken from everything except your medical records.
I have a credit score higher than most Whites, and make over 100k and have almost no debt, and was denied for a small car loan.
I went through a bankruptcy,paid it off so after some time had passed I applied for a loan and was denied last year, have been a member for over 9-10 years, if u have a shaky credit score it’s not worth it, even after going through a bankruptcy
To anyone saying it’s because of bad credit, they are directly comparing white borrowers with the same profiles (credit, debt to income, etc) to black, Latino borrowers. I personally was denied and when I asked what was wrong or why they denied me, they said I should called the credit bureaus and ask. That obviously didn’t make sense, and I ended up moving on. EVERY SINGLE OTHER LENDER approved me in that same time period.
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I had a similar experience with them recently. I was approved but the interest rate was that of a person with subprime credit. They quoted my credit score 70+ points lower than what was showing on any of the credit bureau websites. When I informed the loan officer of this, she said to contact Equifax. They are the ones who reported the score. I called Equifax and the representative I spoke with said that it didn’t made sense to her because my credit score was nowhere close to what NfCU was claiming. When I shared this information with the loan officer it fell on deaf ears. So, I told her to pull my application because I would not be moving forward with it.
Bad credit, not enough income for the loan requested…..don’t expect miracles because of your skin color
You make a lot of assumptions of people who you don’t know, that’s why after 2 years at Navy Federal mortgage is why my current mortgage is with Rocket and money at JP Morgan.
Have you seen the previous comments?
They lowballed me on a loan. I have pretty good credit but ended up having to go to USAA to get treated fairly. I’ve been a Nfcu member since 1990 smh
You clearly have no idea what you’re talking about. Please do some research instead of babbling
I have been with NFCU for over 20+ years and applied for a loan and was approved. Then close to closing on what I was hoping to be my dream home, was unapproved after almost 60 + days. How did I go from approved to unapproved when nothing changed. I had good credit. The owners of the house and realtors couldn’t understand what happened. In fact, they stated if someone gives them an offer with an approval from Navy Federal Credit Union, they will ignore the offer presented by a potential buyer. I later purchased a home using a different lender. SMH and literally disgusted in how their lending department treated me. I have all the emails and documentation to prove my point.
Preach! We had 25% down payment and still dragged out the process 60+ days. We had a great realtor, who literally threatened them if they pulled out. Thank goodness she took care of us, because the average rent her is 3.5K a month and homes from 700K-1.5. No way could we afford this area…especially with a $2K mortgage.
This is exactly what I’m going through right now with them. My closing was suppose to be last Friday. They Nik Pik everyday asking for something from my daughter who was on the loan also. Only to say after all the time and money wasted we are not approved. I am furious and if they are profiling they need to be dealt with legally. I want my money back. My credit score is in the 700’s and my daughters is not bad either and together the income is enough. We have no outstanding large bills to pay my car is paid for, it’s just everyday living expenses.
My partner and I recently started a joint business venture and he having done business with NFCU for over a decade thought it would be a good financial institution to partner with in growing our perspective business. I being reluctant due to the unfair lending practices towards minorities, rumors; Nevertheless, we proceeded. We applied for a credit card and was denied. This was alarming because we both have excellent credit and sound income to support such a request (credit card). Their response was to further inconvenience us in writing a letter of some sort; in my opinion to detour us from furthering our request. I’m so disappointed and have never had such experience as this and would lend more towards the feeling of being discriminated against.
We got a mortgage with Navy Federal, but they drug it out, until our realtor got involved, and the rate was outrageous. 2 years later when we went to refinance, the mortgage director, a black woman literally screamed at me “ You live in DC, your house isn’t worth that much. We went with Rocket, not the best…but the process took 2 weeks at the most, and the rate was 2.5 points lower. I went back to Navy Federal with the pay off check and that same female banker yelled at me for not having loyalty. That house is in Capitol Hill, a mile from Congress and worth 150-200%. I keep a modest amount in Navy Federal to pay bills, investments and cash in JP Morgan.
What did your realtor do
I have been a member of navy Federal Credit Union for 25 years. My father served 30 years in the military, my uncle 26, my grandfather 26, and my sister is a 100% disabled veteran. I do not expect special treatment for their actions, but they fought for the American Values. The disparity of treatment between whites and non-whites is not an American Value, and Navy Federal should be ashamed. They should not be allowed to use the Navy name anymore.
I had a mortgage with Navy Federal on my first home that I purchased in October 2007, I refused to disclose my race on the application. By 2016, on the 30 year loan I had over 50% equity. I attempted to get a equity line of credit with Navy Federal. I disclosed my race, whcich I deeply regret. I was denied despite having an over 800 credit rating and being an attorney for over decade with no debt but my small home and small student loans.
I ended up borrowing money on credit cards at 0% interest and paid them off in 12 months to obtain what I needed. However, it would have been easier on my family, if I had been granted the equity line of credit so that I could provide better opportunities for my family, versus having to pay loans off in 12 months.
I think that race certainly has played a part in Navy Federal’s decisionmaking process. Perhaps part of the problem is that minorities typically have lower credit ratings and lower wealth due to systemic, historic discrimination. However, as an attorney with a credit rating of over 800 why was I denied an equity line on a home that I had over 50% equity? Interestingly, I paid that home off 18 months later in 2018, or 11 years in a 30 year loan.
Meanwhile they are giving white college students $20,000 credit limits on credit card, and Im on social media watching them give interviews on how they make $12/hour and will just file bankruptcy later on…. Haha Navy Federal-
In December of 2021 I got pre-approval to purchase a single family home at Navy Federal with a credit and fico score over 700, I was quoted a rate of 5 percent and one week before I went to closing in January of 2022, NFCU wanted almost $50,000 down payment and said they didn’t lock the rate in and it was now 7.1 percent. My mortgage went from $2,400 to almost $4,000 a month, I couldn’t afford the house, I cry almost every time I pass the house that should have been mine
I wish I knew of these lawsuits against NFCU sooner! My husband and I received a denial letter from them with no real reason but everywhere else pre-approved us INSTANTLY and he has been banking with them since he joined the military almost 10 years ago! We called and everything to find out more information but no one could explain the issue beyond some bs on the phone just to confuse us more, lol. Luckily, we ended up with an amazing lender in the end and in our dream home, a little pricier than it should be for military, but the lesson was learned just to bank with them and NOTHING else.
(and for the credit score scouts – ours is 700 EACH as minorities)
My wife I were pre-approved $850k. We found a house, did everything we were supposed to, didn’t open any new accounts or charge anything new. A week before we were supposed to close and get the keys to our new house, the loan was denied? Without any explanation? I’am a black man.