Navy Federal Credit Union is facing a class action lawsuit after a statistical analysis by CNN found it had the widest gap in conventional mortgage approval rates between white and Black borrowers of any major lender last year.
CNN initially posted the story to its website on Dec. 14. The lawsuit was filed by multiple firms in U.S. District Court in Alexandria, Virginia on Dec. 17. Laquita Oliver and Cherelle Jacob are named as plaintiffs in the filing. Neither Oliver nor Jacob were in the CNN report.
The filing accuses NFCU of violating the Fair Housing Act of 1968 and the Equal Credit Opportunity Act, which prohibit lending discrimination based on race.
CNN found that Black applicants to Navy Federal were more than twice as likely to be denied as white applicants even when more than a dozen different variables – including income, debt-to-income ratio, property value, down payment percentage and neighborhood characteristics – were the same, according to Credit Union Times.
According to the lawsuit, Cherelle Jacob, 40, a Black resident of Washington state, and her service member husband, together “make approximately $200,000 in salary, have no debt, have ample savings, and both have ‘exceptional’ credit scores above 800.” The couple’s mortgage application to Navy Federal in October 2023 was denied before being approved by another lender.
Laquita Oliver, 44, a Black resident of Miami Dade County, Florida, is a capital improvement project analyst and had previously co-owned a small business. The filing states that “she makes approximately $100,000 per year in salary, has good credit, a history of home ownership, and very little debt.” Her mortgage application to NFCU was denied following a month-long process.
In its report, CNN said while its “analysis did not prove Navy Federal is discriminating against borrowers, it did find significant racial gaps in the credit union’s mortgage approval rates.”
Navy Federal Credit Union turned down around “3,700 Black applicants for home purchase mortgages last year, potentially blocking them from homeownership just as interest rates spiked. And Navy Federal also approved Latino borrowers at significantly lower rates than White borrowers,” the news outlet reported.
A NFCU spokesperson told Credit Union Times that “Navy Federal is a not-for-profit credit union and a leading mortgage lender to the black community. We care deeply about the concerns expressed in this case. Out of respect for the judicial process, we will address those concerns in court.”
The lawsuit seeks to “represent a broad class of potential plaintiffs: all Navy Federal minority residential loan applicants from 2018 through the present whose applications were denied, approved at higher interest rates or subject to less favorable terms compared to similar non-minority applicants, as well as those whose applications were processed more slowly than typical,” CNN reported.
Reach Julia LeDoux at Julia@connectingvets.com.