Navy Federal lawsuit

Navy Federal Credit Union Pressured Over Alleged Discriminatory Mortgage Lending Practices

In January, legislators called on federal regulators to look deeper at the approval discrepancy of Navy Federal Credit Union after CNN conducted an investigation and found marked discriminatory lending practices.

Navy Federal Credit Union, the world’s largest credit union , is being accused of employing racially motivated lending practices.

As WAVY reported, the lawsuit was filed in December, but is receiving renewed attention thanks to a news conference from a team of attorneys, including Benjamin Crump, the renowned national civil rights attorney. 

Navy Federal Credit Union is accused of approving white mortgage applicants at a much higher rate than Black and Latinx applicants. However, the bank said the disparity in approvals in 2022 does not consider the myriad factors that go into its approval process. It also touted its record of lending to Black people and its programs designed to aid fair lending practices.

Bob Otondi, one of the plaintiffs in the lawsuit, is a Texas-based executive who said during a Feb. 22 news conference that the bank’s decision to reverse its initial approval of his mortgage is, in his view, based on his race.

“That flies in the face of everything that makes this country great,” Otondi says.

In January, legislators called on federal regulators to look deeper at the approval discrepancy of Navy Federal Credit Union after a CNN investigation found marked discriminatory lending practices. Ten Democratic senators petitioned the Department of Housing and Urban Development and the Consumer Finance Protection Bureau via a letter to investigate the bank’s lending practices and see if the NFCU violated federal anti-discrimination laws.

“Navy Federal’s members have made countless sacrifices in their service to our country,” the senators wrote. “We must do all we can to ensure illegal barriers are not placed on their path to homeownership.”

The Congressional Black Caucus also wrote a letter to the bank, inquiring about setting up a meeting with its CEO as well as wanting both answers and additional data about their alleged racially discriminatory mortgage lending practices. 

“Navy Federal should also disclose whether Black applicants were approved at higher interest rates or subject to less favorable terms compared to similarly situated White applicants,” the letter read in part. “We expect to be provided, at minimum, aggregate data from Navy Federal regarding credit scores or any other non-public variable that Navy Federal has suggested serves as an explanation for Navy Federal’s alarming racial approval gap.”

Andre M. Perry, the senior fellow at Brookings Metro, wrote in a December op-ed for MSNBC that although Navy Federal was being placed under scrutiny for its lending practices, that the entire financial industry needed to be held accountable for standard practices that enable and underpin the industry as a whole.

Perry likened the mortgage lending issue to the issue of discriminatory home or property appraisals, which similarly skew in favor of white homeowners; Perry followed this up by critiquing “race-neutral policies” and offered up a possible solution.

“…The best response would be from the industry as a whole in the form of new mortgage products and practices that replace the vestiges of our segregated past that are very much legal, accepted, and in everyday use.”

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