February 29, 2024 – Consolidated Navy Federal Credit Discrimination Lawsuit Filed in Virginia Court
A proposed class action lawsuit has been filed in the Eastern District of Virginia against Navy Federal over alleged racial discrimination in its mortgage lending practices. The case has since been consolidated with two related lawsuits.
ClassAction.org’s write-up about the lawsuit can be found here.
At A Glance
This Alert Affects:
Non-white individuals who applied for a mortgage at Navy Federal Credit Union.
What’s Going On?
Attorneys working with ClassAction.org are investigating whether they can file a class action lawsuit against Navy Federal Credit Union over concerns that the credit union’s mortgage lending policies disproportionately discriminate against Black, Latino and other minority customers.
How Could a Lawsuit Help?
If successful, a class action lawsuit could force Navy Federal to change how it processes mortgage applications. It could also help Black, Latino and other minority applicants recover money they may have overpaid because of the credit union’s suspected interest rate markups.
Attorneys working with ClassAction.org would like to speak with Black, Latino or otherwise non-white individuals who have applied for a mortgage at Navy Federal Credit Union.
An investigative report published by CNN on December 14, 2023 revealed that Navy Federal—the largest credit union in the country—showed the widest racial disparity in mortgage approval rates among the nation’s major lenders. In fact, an analysis of public mortgage data by CNN found that Black applicants were more than twice as likely to be denied by Navy Federal as white applicants with the same financial profile.
A handful of proposed class actions have already been filed against Navy Federal in the wake of CNN’s report, and now attorneys working with ClassAction.org are looking to get additional cases on file.
What Does the Report Say About Navy Federal?
CNN’s analysis of home mortgage data made available by the Consumer Finance Protection Bureau shows that in 2022, Navy Federal approved 77.1 percent of white borrowers who applied for a new conventional home purchase mortgage. Only 55.8 percent of Latino borrowers and 48.5 percent of Black borrowers who applied for the same type of loan were approved that year.
According to the article, Navy Federal’s nearly 29-percentage-point gap between Black and white applicants was “by far” the largest observed among any of the top 50 mortgage originators 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 reported in a December 19 article.
Attorneys working with ClassAction.org believe that, in addition to its stark racial approval rate gap, Navy Federal may systematically offer Black and other non-white borrowers higher-interest loans compared to those offered to white borrowers.
How Could a Lawsuit Help?
A class action, if filed and successful, could force Navy Federal to change how it processes mortgage applications to reduce racial disparities. For example, advocates have urged lenders like Navy Federal to improve their use of automated underwriting systems to deny or approve mortgage applications, given that these algorithms can contain hidden bias and lead to disparate outcomes for non-white customers.
A successful case against Navy Federal could also help Black, Latino and other minority applicants recover money they may have overpaid as a result of the credit union’s possible interest rate markups.