Lawsuit alleges racial discrimination in housing lending by Navy Federal Credit Union

Veterans who are Black said they were denied housing loans from a major credit union because of their race.

A CNN investigation found Navy Federal Credit Union was more than twice as likely to deny Black loan applicants than white applicants. The credit union said that doesn’t tell the full story, though.

Veterans were emotional speaking at a New York news conference Thursday about their experiences trying to get housing loans from Navy Federal Credit Union.

“We found our dream home,” said veteran Carl Carr. “We turned to Navy Federal because we trusted them.”

Carr said he joined the credit union in 1982, the same year he enlisted in the U.S. Navy.

“I joined when I was an inner-city kid in north New Jersey. The Navy offered direction and opportunity to kids like me,” he said.

He said he and his wife were denied a mortgage loan from Navy Federal in 2021, even though they were the ideal applicants, checking all the boxes when it came to income, debt-to-income ratio, and cash in the bank.

“Being African American, we knew that we just couldn’t be equal, we had to be better,” he said. “We knew we had to surpass all the criteria.”

He said they were excited when they were pre-approved, but then, their loan was denied two days before closing.

He claims it was because of racial discrimination.

“Navy Federal, this is wrong. Do better. Make it right,” he said.

In a federal lawsuit, two plaintiffs allege they were denied housing loans because of their race.

Navy Federal serves more than 13 million members including servicemembers, veterans and their families. It has multiple branch and ATM locations in the Jacksonville area.

A CNN analysis of data from the Consumer Financial Protection Bureau found Navy Federal approved more than 75% of white borrowers for mortgages in 2022, while approving less than 50% of Black borrowers. Their analysis also found that Black applicants were more than twice as likely to be denied than white applicants, even when more than a dozen factors such as income, debt-to-income ratio, and down payment percentage were the same. CNN reported Navy Federal was slightly more likely to approve a white applicant making $62,000 or less than a Black applicant making $140,000 or more.

A spokesperson from Navy Federal said CNN’s analysis was not an accurate reflection of their lending practices because it did not account for other factors, such as credit score, cash in the bank, and relationship history with the lender.

Now in a federal lawsuit, two plaintiffs say they were denied loans because of their race, citing CNN’s findings and their own stories. They are asking the court to allow their claim to become a class action case open to affected minority applicants from 2018 to the present. They say there could be thousands of others who faced discrimination.

A spokesperson from Navy Federal sent a statement to News4JAX, stating, “As a not-for-profit credit union, Navy Federal is committed to serving each and every one of our members fairly, and we work daily to help expand economic opportunity and access to credit for our diverse community of members. Black borrowers make up one in four of our members, and we are proud of the fact Navy Federal ranks first among large lenders in the percentage of mortgage loans made to Black borrowers. We have robust fair lending programs that perform testing and review policies, procedures, and lending data, which help expand economic opportunity and access to homeownership. While it is Navy Federal’s policy not to comment on pending litigation, we look forward to responding to these claims in our forthcoming filings with the court.”