The largest credit union rejected over 50% of its Black home mortgage applicants

A CNN analysis has found that Navy Federal Credit Union (Navy Federal) - the largest credit union - has the widest disparity in mortgage approval rates between White and Black borrowers of any major lender. In 2022, the disparity increased.

Navy Federal was founded in 1933 to serve Navy employees, but is now open to all members of the armed forces, Department of Defense personnel, veterans, and their relatives. With a membership around 13 million, it has over $165 billion in assets. Navy Federal lends to military servicemembers and veterans. 

Navy Federal approved more than 75% of the White borrowers who applied for a new conventional home purchase mortgage in 2022, according to the most recent data available from the Consumer Financial Protection Bureau. Less than 50% of Black borrowers who applied for the same type of loan were approved. In 2022, the credit union rejected about 3,700 Black applicants for home purchase mortgages. Navy Federal also approved Latino borrowers at significantly lower rates than White borrowers.

While many banks - in Baltimore and elsewhere - also approved White applicants at higher rates than Blacks, the almost 29% gap in Navy Federal’s approval rates was the widest of any of the 50 U.S. lenders that originated the most mortgage loans in 2022. The disparity was the same for White and Black applicants who had similar incomes and debt-to-income ratios. Navy Federal approved a slightly higher percentage of applications from White borrowers making below $62,000 a year than it did of Black borrowers making $140,000 or more.

CNN's statistical analysis also found that Black applicants to Navy Federal were over twice as likely to be denied as White applicants even when over 12 different variables – such as income, debt-to-income ratio, property value, downpayment percentage, and neighborhood characteristics – were the same.

Mortgage lending experts and fair housing advocates commented that the racial gaps in Navy Federal’s approval rates were very large and raised questions about the institution’s lending practices. Lisa Rice, the president and CEO of the advocate National Fair Housing Alliance said the racial gaps in Navy Federal’s lending identified by CNN were “some of the largest I’ve seen.”

It is important to note that CNN’s analysis doesn’t prove that Navy Federal discriminated against any borrowers. However, it does show significant disparities in the credit union’s approval rates for borrowers of different races – and that it has larger racial gaps than many other large financial institutions. The analysis was based on data collected under the Home Mortgage Disclosure Act.

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Read the December 14, 2023 CNN article.

 

HUD Charges New York Corporation and Associated Entities for Targeting Black Caribbean Homeowners in Fraudulent Mortgage Scam

HUD has charged multiple entities and individuals related to the Homeowner Assistance Services of New York (HASNY) with housing discrimination for perpetrating a scheme to deceive distressed homeowners into forfeiting title to their homes. HUD’s charge alleges that HASNY – plus six individuals, Springfield Realty of New York, Inc., Martin Development and Management, LLC, Launch Development, LLC, 272 Milford Street, LLC, Advill Capital, LLC, and Petermark II, LLC - targeted New York City homeowners in violation of the Fair Housing Act. Read the Charge. 

The Charge, filed on behalf of seven homeowners, alleges that HASNY and its associates targeted the homeowners for fraudulent mortgage and foreclosure prevention assistance by filing illegitimate liens and using telemarketing to convince homeowners to engage with HASNY for refinance assistance. After the homeowners accepted their offer of assistance, they used false promises of legal assistance, reassurances, and outright lies to convince the homeowners to sign documents that unknowingly sold their homes to Martin Development, LLC and Launch Development, LLC, which resulted for most forced them to vacate their homes. HASNY’s actions were disproportionately concentrated in neighborhoods which had a high majority of persons of color, especially Blacks and of Caribbean descent. They also used “affinity marketing” to gain the trust of elderly, vulnerable, and distressed homeowners by having telemarketers use their shared national origin and cultural practices to build trust with the homeowners. 

The U.S. Department of Justice previously criminally charged 3 of the men, as well as several other HASNY employees, with bank and wire fraud crimes from the conduct alleged in the Charge. Two respondents pleaded guilty and one was convicted after a jury trial and later disbarred. 

A U. S. Administrative Law Judge will hear HUD’s Charge unless any party elects to have the case heard in federal district court. If an administrative law judge finds, after a hearing, that discrimination has occurred, the judge may impose civil penalties and/or award damages to the homeowners for their losses as a result of the discrimination, injunctive relief, other equitable relief, as well as payment of attorney fees. In addition, the judge may impose civil penalties to vindicate the public interest. If a federal court hears the case, the judge may also award punitive damages to the homeowners. 

Read the June 13, 2023 HUD press