Lawmakers in the U.S. Congress this week called for an investigation into the Navy Federal Credit Union, the largest credit union in the country, due to allegations of racial disparities in the lender's mortgage approval practices.
At least ten Democratic U.S. senators, including the chairs of the Senate Banking and Finance committees Sen. Sherrod Brown (D-OH) and Sen. Ron Wyden (D-OR), authored a letter where they asked regulators at the Department of Housing and Urban Development and the Consumer Financial Protection Bureau to launch the probe.
"Recent reporting has raised questions about Navy Federal Credit Union's (Navy Federal) mortgage approval rates of Black and Hispanic applicants compared to those of white applicants. We are writing to you to request that you review Navy Federal's mortgage lending practices and outcomes for compliance with the Fair Housing Act and the Equal Credit Opportunity Act (ECOA)," the letter read.
"Consumers often turn to credit unions, which are financial institutions built on the principle of member-ownership, for their family's biggest financial decisions. Members want to trust their credit unions. This trust is lost if they are not confident whether they are being fairly evaluated," the letter continued.
That letter came after 40 members of the Congressional Black Caucus also wrote to Navy Federal on Thursday requesting a meeting with the lender's CEO.
What Spurred the Calls for an Investigation?
The letters come after CNN in early december alleged that Navy Federal approved 77% of new conventional home purchase mortgage filed by White borrowers but only approved the applications of Black borrowers who applied for the same type of loan.
The report also noted that the Navy Federal approved the applications of more White borrowers earning less than $62,000 annually than it did Black borrowers who made at least $140,000 a year.
The disparity in application approval remained even when certain variables such as the debt-to-income ratio, property value, and the down payment percentage were similar between Black borrowers and White applicants.
In a statement noted by CNN Business, a Navy Federal spokesperson said the credit union is now reviewing its practices and argued that it provided a higher percentage of loans to Black borrowers than most large lenders in the country.
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