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Mortgage Denied to Two Blacks by the Navy Federal: An Act of Racial Discrimination or Not?

Kristoffer Hicks and Masheeha Hopper have filed a lawsuit against the Navy Federal Credit Union for discriminating against them based on their race.

What Does the Lawsuit Mention

The lawsuit was filed on Dec 28 by the two African Americans who are members of the Navy Federal Credit Union, for denying them a mortgage. The lawsuit mentions that the Federal’s action denies the minority borrowers from accessing ownership of a house by showing such discrimination. 

A CNN investigative report revealed 2022 data in which Navy Federal approved 77% of mortgage applications from white Americans while denying 52% applications of African Americans along with 44% of Latino applications. The data showing the Federal’s interest more towards the needs of whites while ignoring the other races.

The Federal’s customer base consists of the military and their families. Such acts of discrimination, affect not only the members but their families too. Two lawsuits have been filed against the Union adhering to violation of the Fair Housing Act and the Equal Credit Opportunity Act, both claiming to deny the minority borrowers mortgage even after their qualified income level.

Effect on the Plaintiffs

The discrimination has caused the two plaintiffs to pay more for their homes. Hicks, a member of the military, said that after his application was denied even after an income of nearly $90,000, he had to find a loan from a different lender who lent it at a higher interest rate. He is disappointed by the action as he pays more to live in a small home.

Hopper got the Navy Federal membership through her sister’s service in the Army. Even with an income of $86,000, she was denied a mortgage after she submitted many applications between 2021 and 2023.

The Federal gives the members a loan without any down payment. If Hopper wasn’t denied a loan from the Union, which she had to borrow from a loaner that asked for a $12,000 down payment, she wouldn’t have needed to do so.

The two felt the scarcity of housing options as well as felt betrayed as they had to pay more for the small area they were provided.

Such Act Questioning the Integrity of the Union

According to reports from CNN, the Union, which is the largest in the US, has been facing issues regarding racial disparity and violation of federal laws. The gap between the mortgage given to the whites and other minorities has raised questions about the integrity and claims by the Union to have diverse equity. The gap remains even after the minorities are eligible for a mortgage after accounting for every variable.

In 2023, the Federal nearly approved 75% of white applications and less than 50% of black borrowers according to the data from the Consumer Financial Protection Bureau. The gap clearly shows the racial disparity between the white and the black Americans. 

Maxine Waters, the ranking Democratic member of the House Financial Service Committee, said in a statement in December that she was surprised by the Federal’s racial discrimination and requested the Financial Protection Bureau as well as the National Credit Union Administration, two bodies that keep the check on Navy Federal, to investigate the matter.

Federal’s Response

 Navy Federal denied the accusations in December, claiming they have never discriminated based on race and have always been committed to fair lending based on the criteria set. 

Navy Federal spokesperson, Bill Pearson defended the Union, by stressing the fact that they are committed to fair lending practices. Their criteria include employee training, statistical testing, and third-party evaluations and when passed, they give mortgages accordingly.

The allegations, whether proven or not, raise the serious matter of racial discrimination in the mortgage lending system.

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