Largest Us Credit Union Reveals Mortgage Approval Rates

A recent analysis by CNN has exposed troubling racial disparities in mortgage approval rates at the largest credit union in the United States. Navy Federal Credit Union, specializing in lending to military servicemembers and veterans, exhibited the widest gap in approval rates between White and Black borrowers among the top 50 mortgage lenders in 2022.

According to data from the Consumer Financial Protection Bureau, Navy Federal approved over 75% of White applicants seeking new conventional home purchase mortgages last year. In stark contrast, less than 50% of Black applicants who applied for the same type of loan received approval.

While discrepancies in approval rates between White and Black applicants are prevalent in many financial institutions, Navy Federal's nearly 29-percentage-point gap is the most significant among the top mortgage lenders analyzed. This revelation raises concerns about fair lending practices and access to housing for minority borrowers.

The analysis further revealed that the racial disparity persisted even when comparing applicants with similar incomes and debt-to-income ratios. Notably, Navy Federal approved a higher percentage of applications from White borrowers earning less than $62,000 annually than from Black borrowers with incomes exceeding $140,000.

In a more in-depth statistical examination conducted by CNN, it was found that Black applicants to Navy Federal were more than twice as likely to face denials compared to their White counterparts, even when controlling for multiple variables such as income, debt-to-income ratio, property value, downpayment percentage, and neighborhood characteristics.

Navy Federal, originally established in 1933 to serve Navy employees and now open to all members of the armed forces, Department of Defense personnel, veterans, and their relatives, holds a significant presence with over 13 million members and assets exceeding $165 billion.

The revelations from this analysis draw attention to the need for scrutiny and potential reforms in the credit union's lending practices to address racial inequalities in mortgage approvals.