Lawsuit Alleges Navy Federal ‘Systemically’ Discriminates Against Minority Mortgage Borrowers [UPDATE]

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A proposed class action lawsuit alleges Navy Federal Credit Union has systemically and intentionally discriminated against Black, Latino, Native American and other racial minorities nationwide by disproportionately denying mortgage applications “that would have been approved for similarly situated white Americans.” 

If you are a non-white consumer who applied for a mortgage with Navy Federal Credit Union, let us know here. 

The 24-page lawsuit, filed in Virginia on December 28, 2023, says that Navy Federal’s own data shows that, in 2022, it denied Black home loan applicants at a rate of 52 percent, while the credit union denied only 23 percent of applications from white consumers. Further, Navy Federal denied Latino and Native American home loan applicants at rates of 44 percent and 36 percent, respectively, during the same year, the complaint states. 

According to the suit, third-party analysis from late last year found that Navy Federal had “statistically significant racial disparities in its mortgage approval rates.” Even when more than a dozen income and socioeconomic variables were equal, Black applicants were “more than twice as likely to be denied as White applicants,” while Latino applicants were around 85 percent more likely to be denied than white consumers, the filing states. 

“Said differently, Navy Federal’s own data reflects one clear and unmistakable conclusion: Navy Federal—the nation’s largest credit union, with over $165 billion in assets and 13 million members—systemically and intentionally discriminates against minority borrowers across the United States,” the lawsuit summarizes, accusing Navy Federal of “deny[ing] minority borrowers access to the American dream.” 

Compounding matters, the case continues, is that Navy Federal’s customer base consists primarily of active-duty military, their families, and veterans. 

“[W]hen Navy Federal discriminates, it’s the current and former members of the armed forces—and their families—who are harmed,” the suit scathes, adding that “[w]hat Navy Federal has done [to the plaintiffs and proposed class members] is not just wrong. It is illegal.” 

The filing relays that, per the Home Mortgage Disclosure Act (HMDA), lenders are required to provide certain data to the Consumer Financial Protection Bureau (CFPB), and certain fields of this data are made publicly available online. The lawsuit states that third-party analysis of the HMDA data reflects that although many major lenders “are engaged in discriminatory lending practices,” Navy Federal’s conduct in this area “stand[s] out as by far the worst.”

“As the data makes clear, Navy Federal’s discriminatory practices put them in a league of their own,” the suit reads, stressing that the data “clearly and unequivocally shows that Navy Federal rejects a disproportionate number of non-white applicants.”

Notably, the complaint, citing the 2022 data, shares that a Black consumer earning $140,000 or more per year had roughly “the same odds of being approved” for a home loan by Navy Federal as a white applicant making only $61,000 per year or less.

According to the case, Navy Federal is “no doubt well aware” of the systemic discrimination in its mortgage lending processes yet has failed to take appropriate measures to ensure “a fair and unbiased application, review and approval process.” 

The lawsuit looks to cover all applicants in the United States who, from 2018 through the present, submitted an application for a home mortgage loan, including home refinancing, to Navy Federal Credit Union that was either denied or approved on less favorable terms as compared to similarly situated white applicants. 

If you are a non-white consumer who applied for a mortgage with Navy Federal Credit Union, let us know here.