Navy Federal Credit Union, the largest in the United States, this week asked a judge to dismiss a racial lending discrimination lawsuit filed against them, adding that a review found that race did not play a role in the disparities.
In a statement released on March 21, Navy Federal said they hired Debo Adegbile of WilmerHale, a leading civil rights lawyer and former Commissioner of the U.S. Commission on Civil Rights, to review the company's mortgage lending process due to CNN's allegations of racial disparities. The firm said Adegbile "found no race-based decision-making in our mortgage underwriting" and that "non-race factors" had caused the racial differences in approval rates.
"Mr. Adegbile has now completed his review, and found no race-based decision-making in our mortgage underwriting," the statement read. "The remaining difference in approval rates is explained by legitimate, non-race factors like income verification and incomplete credit applications. Navy Federal is exploring opportunities to enhance its mortgage lending practices and drive further access to homeownership."
Navy Federal described Adegbile's analysis as an "external review." However, it is important to note that his law firm, WilmerHale, is currently defending the credit union in a class-action lawsuit from Black and Latino borrowers. In the lawsuit, the plaintiffs alleged the credit union discriminated against them in mortgage applications.
Other lawyers from WilmerHale filed a motion to dismiss the lawsuit the same day Navy Federal published a statement about the review. However, the analysis was not included in the motion to dismiss the case, as reported by CNN.
Behind the Racial Disparity Lawsuit
The lawsuit came after CNN in December published an investigation that found that Nacy Federal approved more than 75% of White borrowers applying for a new conventional home purchase mortgage in 2022 while approving only less than 50% of Black borrowers who applied for the same type of loan. The investigation cited federal data from the Consumer Financial Protection Bureau.
The investigation noted that the disparity remained even after they accounted for different variables, including an applicant's income, debt-to-income ratio, and property value.
After CNN published its report, lawmakers in the U.S. Congress called for an investigation into Navy Federal's mortgage approval practices. An analysis by the staff of the Senate Banking Committee also found racial disparities in Navy Federal's mortgage approval rates based on publicly available data.
