PORTSMOUTH, Va. — Navy Federal Credit Union is accused of racially biased lending practices
A report by CNN found Black applicants are more likely than White applicants to be denied conventional home mortgage loans by lenders at the Virginia-based credit union.
Meanwhile, a spokesperson for Navy Federal said the CNN report does not "accurately reflect" the credit union's practices.
Edward Barnes said his mortgage refinancing application got denied earlier this year and now he’s questioning why.
“It’s just not making sense. Especially me being the 34-year loyal customer that I am. I just don’t understand it," the Portsmouth resident said. “It’s really not making sense. It’s definitely disappointing.”
Barnes said he first applied in October and that after the rejection, another lender approved his request two months later.
“I just don’t understand it because I’m actually in the process of getting a home refinance approved by another company which is Tidewater Mortgage out of Virginia Beach. I go to closing on the 21st,” Barnes said. “I submitted the same exact paperwork and everything that I submitted to Navy Federal and literally my closing is on the 21st of this month.”
A CNN analysis pointed to a disparity in mortgage approval rates at Navy Federal. The report said that more than 75% of White borrowers got approved while less than 50% of Black borrowers got that same approval, despite similar incomes and debt ratios.
A spokesperson for Nay Federal said in a statement that the credit union is committed to “equal and equitable lending practices.”
The statement said: “CNN’s recent analysis of mortgage lending data does not accurately reflect our practices, and furthermore their mortgage data model does not account for major criteria required by any financial institution to approve a mortgage loan.”
The Navy Federal spokesperson said while it could not comment on Barnes' personal financial information, Navy Federal provides more mortgage loans to Black applicants than "the vast majority" of top lenders.
"As a not-for-profit, member-centric, membership organization, we are focused on expanding awareness and access to homeownership across the country," the statement said. "We are proud of the fact that we provide a higher percentage of mortgage loans to Black applicants than the vast majority of the top 50 mortgage originators nationwide."
Thomas Fitzpatrick of Housing Opportunities Made Equal of Virginia said housing discrimination in the state remains a big concern, whether it's renting or buying.
“It often happens behind a handshake, behind a smile," Fitzpatrick said. "And then it’s decisions that are made in a back office somewhere that could really impact someone’s lives... and at the root of it, it impacts where they live."
He said his team uses “testers” to apply for loans and uncover disparities.
“We might send a Black tester and a White tester to the same business or mortgage company and see if they had different experiences. If we start to see a pattern there, we may be able to discern that there’s discrimination taking place," Fitzpatrick said.
“Our Black tester went in and had, what they thought was, a good conversation with the loan officer: 10, 15 minutes explaining the products. Then a White tester went in and had another conversation with the loan officer but their conversation took place for an hour and they got follow-up text messages and follow-up e-mails. So the Black tester would not have known they were discriminated against but the difference in how they are treated is really problematic.”
Fitzpatrick wouldn't say which lending agency this scenario happened at.
Barnes said any sort of discrimination - in housing or other avenues - should be addressed.
“We’re in 2023. They should be past this. Stuff like this shouldn’t be happening," Barnes said. “It has to stop. We deserve equal and fair chances just like the next applicant.”
The Navy Federal spokesperson said: "Employee training, fair lending statistical testing, third-party evaluations, and compliance reviews are embedded in our lending practices to ensure fairness across the board."