Navy Federal Credit Union: Discriminatory Lending Practices Lead to Class Action

Photo courtesy of Dallas Morning News/Navy Federal Credit UnionPhoto byDallas Morning News

A group of attorneys, along with civil rights advocate Ben Crump, claims Navy Federal Credit Union, the world’s largest credit union used racially-motivated lending practices.

The lawsuit documents allege that Navy Federal approved White mortgage applicants at a higher rate than Black and Hispanic applicants in 2022. Navy Federal Credit Union said in a statement, “The disparity in approval rates doesn’t take into account all factors, that it’s a national leader in lending to the Black community and points to what it describes as robust and fair lending programs committed to serving each and every member fairly.”

Plaintiff Bob Otondi was an executive with his company in Texas. Navy Federal initially approved his application, but then reversed the decision and rejected him two weeks before closing Otondi said, “I know that the reason that Navy Federal denied my mortgage application was because of my race,” Otondi said. Navy Federal Credit Union first came under fire about its lending practices in a CNN investigation in December. Ben Crump stated a report shows Navy Federal rejected just 23% of White applicants in 2022, the rejection rate rose to 44% for Hispanics and jumped to 52% for Black mortgage applicants. He said this has forced people of color to go to other lenders at higher interest rates.
This is what happened to Marie Pereda, her Marine Corps husband had a high income with no debt, but their mortgage application was rejected. They had to start their search for another lender again. “The delay caused the interest rates to go up and the house that we purchased was more expensive,” Pereda said, “so we are paying more than we would have if Navy Federal had approved us.”

Navy Federal Credit Union released a statement sent to Wavvy on Thursday. They said, “It is committed to serving all of its members fairly.”

Per Navy Federal Credit Union statement reads: “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.”

Another Veteran came forward, Christina Hill is a former Navy E-4 and she is a disabled veteran. She had been a Navy Federal member for decades. She said her pride was shattered when Navy Federal Credit Union denied her mortgage application. Per Hill's statement, “If my bank for over 30 years would not give me a loan, I could not believe that another bank would.”

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