Lawmakers call on federal regulators to review Navy Federal over mortgage approval disparities, citing CNN investigation

By Casey Tolan and Rene Marsh, CNN

(CNN) — More than four dozen members of Congress signed on to two letters Thursday expressing concern about the lending practices of the nation’s largest credit union, citing a CNN investigation into racial disparities in the lender’s mortgage approvals.

In a letter to the Department of Housing and Urban Development and the Consumer Financial Protection Bureau, ten Democratic U.S. senators asked the regulators to investigate Navy Federal Credit Union’s mortgage lending for compliance with federal anti-discrimination laws. The credit union, which has more than 13 million members, lends to military servicemembers, defense personnel, veterans, and their families.

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

The letter’s authors include the chairs of the Senate Banking and Finance committees, Sen. Sherrod Brown, D-Ohio, and Sen. Ron Wyden, D-Oregon.

In addition, 40 members of the Congressional Black Caucus wrote a separate letter to Navy Federal on Thursday requesting a meeting with the credit union’s CEO and asking for answers and additional data about racial disparities in its mortgage lending.

A CNN investigation last month found that Navy Federal approved more than 75% of the White borrowers who applied for a new conventional home purchase mortgage in 2022 while approving less than 50% of Black borrowers who applied for the same type of loan, according to the most recent federal data available.

The nearly 29-percentage-point gap in Navy Federal’s approval rates was the widest of any of the 50 lenders that originated the most mortgage loans in 2022. The disparity remained even after accounting for variables such as applicants’ income, debt-to-income ratio, property value, and down payment percentage, CNN’s review found.

The senators cited CNN’s reporting in their letter, as well as a separate analysis of Navy Federal’s public mortgage lending data conducted by banking committee staff. That analysis found the credit union denied conventional mortgage applications from Black and Latino applicants at substantially higher rates than the national average. The racial disparity was also present for VA loans, the senators said.

“When denial rates for Black and Hispanic applicants at one institution appear to be drastically higher than the national average and higher than their rates for similarly situated white borrowers, it raises questions about whether its mortgage lending practices comply with federal fair housing and fair lending laws and regulations,” the letter reads.

In the other letter from the Congressional Black Caucus members, which also cited CNN’s reporting, the signatories requested a meeting with Navy Federal CEO Mary McDuffie before the end of the month “to discuss how such striking disparities occurred and what immediate actions are being taken to remedy harmful policies, practices, and procedures.” The letter was authored by Reps. Emanuel Cleaver and Steven Horsford, the former and current chairs of the caucus, and the signatories also include Rep. Hakeem Jeffries, the House Minority Leader.

“Navy Federal should explain its increasingly widening racial lending gap and how more than half of the Black service members, veterans, and their families who applied for a conventional mortgage in 2022 were rejected and denied homeownership and wealth building opportunities,” the letter states.

In a statement Thursday, a Navy Federal spokesperson said the credit union was already reviewing its mortgage practices, and noted that it provided provided a higher percentage of its loans to Black borrowers than most other large lenders.

“Navy Federal is committed to serving each and every one of our members fairly, and we strive every day to expand economic opportunity and access to credit for our diverse community of members,” the spokesperson said. “Because these issues are core to who we are, we have also already initiated a review to assess our mortgage lending policies and practices.”

The credit union has previously argued that CNN’s analysis is incomplete because it did not include applicants’ credit scores or information about their available cash deposits or relationship history with the lender – none of which is publicly available in the federal data. The credit union declined to provide CNN any additional data that would make it possible to analyze those factors.

In addition to the two letters, Maxine Waters, the top Democrat on the House Financial Services Committee, has previously publicly urged federal regulators to examine Navy Federal’s mortgage practices.

A CFPB spokesperson said the agency had received the senators’ letter and is reviewing it. A HUD spokesperson said in a statement that the agency is “deeply concerned about racial disparities in mortgage lending opportunities,” especially because racial gaps in homeownership are larger today than they were decades ago.

Navy Federal is also facing two class-action lawsuits from Black borrowers who were denied loans and are accusing the lender of racial discrimination. Both of the lawsuits cite CNN’s reporting.

Lawyers for the plaintiffs – including the civil rights lawyer Ben Crump – moved late last month to combine the two cases, which were filed in a Virginia federal court. Navy Federal has not yet responded to the lawsuits in court.

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