By Bria Overs

Originally appeared in Word in Black

A new analysis from CNN found Navy Federal Credit Union, the largest credit union in the US serving military service members and veterans, denied more than half of its Black conventional mortgage applicants. It rejected an estimated 3,700 Black homebuyers last year.

Homeownership is one of the few keys to wealth, next to investing in stocks and other methods. Yet, less than 50% of Black people are homeowners compared to 74.5% of white people, according to the Federal Reserve. The homeownership gap is one of many economic indicators in which Black Americans are disproportionately underrepresented.

CNN analyzed loan application data collected by the Consumer Financial Protection Bureau through the Home Mortgage Disclosure Act and reported that Navy Federal’s rate of denials was the “widest of any of the 50 lenders that originated the most mortgage loans last year.” The institution had a near 29-percentage-point gap in approval rates.

It is not uncommon for banks and other institutions to deny Black people loans and other financial opportunities. However, these rejections occurred disproportionately despite similarities between white and Black loan applicants in income, debts, property value, down payment percentage, and location.

“That is a quite stark disparity. It’s unusual for us to see instances where the lender denies more loans than it approves.”

LISA RICE, THE PRESIDENT AND CEO OF THE NATIONAL FAIR HOUSING ALLIANCE, TOLD CNN

In a statement to CNN, Navy Federal spokesperson Bill Pearson said the credit union is “committed to equal and equitable lending practices and strict adherence to all fair lending laws.” But claimed the news organization’s analysis inaccurately reflected their practices because “it did not account for ‘major criteria required by any financial institution to approve a mortgage loan.”

Pearson highlighted factors like “credit score, available cash deposits, and relationship history with [the] lender.”

Although the rate of denials was high, around 18% of conventional loans originating from Navy Federal went to Black borrowers, more than any other lender. And they did approve loans for 48.5% of Black applicants, compared to 77% of white applicants. 

In the article, CNN notes its analysis “doesn’t prove that Navy Federal discriminated against any borrowers. But it does show significant disparities in the credit union’s approval rates for borrowers of different races – and that it has larger racial gaps than many other large financial institutions.”