Senators urge federal regulators to review Offshore Federal mortgage disparities, citing CNN investigation.

Senators urge federal regulators to review Offshore Federal mortgage disparities, citing CNN investigation.



CNN

More than four dozen members of Congress signed 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 US senators asked regulators to investigate Navy Federal Credit Union’s mortgage lending compliance with federal anti-discrimination laws. With more than 13 million members, the credit union lends to military personnel, defense personnel, veterans and their families.

The senators wrote in the letter that “Federal members of the Navy have made countless sacrifices in their service to our country.” “We must do everything we can to ensure that there are no illegal barriers to home ownership.”

The authors of the letter include Sen. Sherrod Brown, D-Ohio, and Sen. Ron Wyden, D-Oregon, chairmen of the Senate Banking and Finance Committees.

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 more information about racial disparities in mortgage lending.

Last month, a CNN study found that Navy Federal approved more than 75% of White borrowers who applied for new conventional home mortgages in 2022, compared to less than 50% of Black borrowers who applied for the same type of loan. the most recent federal data available.

The nearly 29 percent gap in Navy Federal’s approval rates was the widest of the 50 largest mortgage lenders in 2022. This difference remained even after accounting for variables such as applicants’ income and debt-to-income ratio. ratio, property value and down payment interest, a CNN study found.

In their letter, the senators cited the CNN report as well as a separate analysis of public mortgage loan data by Navy Federal banking committee staff. This analysis found that credit unions turned down conventional mortgage applications from black and Latino applicants at a significantly higher rate. national average. Racial disparities also exist for VA loans, the senators said.

“When an institution’s denial rates for Black and Hispanic applicants appear to be dramatically higher than the national average and higher than 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 rules”, the letter says.

In another letter from members of the Congressional Black Caucus, which also cited a CNN report, the signatories “requested a meeting with the Navy’s Federal Director General, Mary McDuffie, before the end of the month to discuss how such striking disparities occurred and what immediate action should be taken.” eliminate harmful policies, practices and procedures.” Among the authors of the letter is House Minority Leader Hakeem Jeffries.

The letter states: “The Navy must address the Federal, widening racial credit gap and how more than half of Black service members, veterans and their families applying for conditional mortgages in 2022 were denied and denied opportunities for home ownership and wealth building. “.

In a statement Thursday, a Navy Federal spokeswoman said the credit union had already reviewed its mortgage practices and offered higher interest rates to black borrowers than other major lenders.

“The Navy is committed to providing equitable service to each of our Federal members, and we strive every day to expand economic opportunity and credit for our diverse member communities,” he said. “Because these issues are core to who we are, we have already begun a review to evaluate our mortgage lending policies and practices.”

The credit union previously argued that CNN’s analysis was incomplete because it did not include information about applicants’ credit scores or their existing cash deposits or lender relationships — none of which is public in federal data. The credit union declined to provide CNN with any additional information that would allow it to analyze those factors.

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

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

Navy Federal also faces two class-action lawsuits from Black borrowers who were denied loans and accused the lender of racial discrimination. Both claims cite a CNN report.

Attorneys for the plaintiffs, including civil rights attorney Ben Crump, moved late last month to consolidate the two cases filed in federal court in Virginia. The Navy has not yet responded to the claims in federal court.

This story has been updated.

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