A new class-action lawsuit accuses the Navy Federal Credit Union, the largest credit union in the nation, of racial discrimination in its home mortgage practices.

Civil rights attorneys Ben Crump and Adam Levitt filed the federal lawsuit Sunday (Dec. 17) on behalf of Black plaintiffs. Navy Federal rejected their home loans despite them having stellar credit ratings and high income.

According to the lawsuit, Navy Federal violated the Fair Housing Act of 1968 and the Equal Credit Opportunity Act, which prohibit lending discrimination based on race.

The lawsuit cites a CNN analysis published Thursday (Dec. 14). It found that the credit union had the widest mortgage approval rate disparity between white and Black borrowers in 2022. 

“The outright discrimination that occurs when Banking While Black continues to reveal itself in the lending practices of many of America’s largest financial institutions,” Crump stated. 

“It is shameful that Navy Federal, an organization that prides itself in helping the families of men and women who served their country, does not give their Black and Latino customers the same opportunities as White customers.”

CNN’s investigation found a nearly 30 percent gap between Navy Federal’s home mortgage approval rate between White and Black members. While the data don’t prove discrimination, it goes a long way toward explaining why the credit union rejected Cherelle Jacob and Laquita Oliver’s applications.

Jacob, a 40-year-old teacher with a Master’s degree, and her husband, who is in the armed services, together “make approximately $200,000 in salary, have no debt, have ample savings, and both have ‘exceptional’ credit scores above 800,” according to the complaint. 

Oliver, 44, is a capital improvement project analyst who “makes approximately $100,000 per year in salary, has good credit, a history of home ownership, and very little debt.” Yet, Navy Federal rejected the Miami-Dade County resident’s application to support purchasing a $400,000 home. 

According to CNN’s probe, the credit union approved applications for 77 percent of whites, 56 percent of Latinos and 49 percent of Blacks in 2022. The 28.6 percent gap between white and Black applicants was the largest among 50 financial institutions. In its analysis, CNN accounted for variables, including income, debt-to-income ratio, property value, and down payment percentage.

In response, Navy Federal spokesperson Bill Pearson defended the credit union’s lending practices, telling CNN that it’s “committed to equal and equitable lending practices and strict adherence to all fair lending laws.” 

He claimed that CNN failed to account for credit scores, cash deposits and the applicants’ history with the credit union.

CNN said that information is not available to the public, and the credit union declined a request to share that data, adding that Navy Federal rejected most applicants for reasons other than credit history.

Navy Federal’s alleged discriminatory practices are part of a widespread problem in the mortgage loan industry. 

The New York Times reported a National Association of Real Estate Brokers study released in 2022 found that lenders denied 15 percent of Black home mortgage applicants compared to 6 percent of white applicants. At the same time, Black borrowers relied on high-cost loans nearly three times more than their white borrowers.

“We hope this legal action will stop racial lending discrimination in its tracks and require Navy Federal to right their wrongs,” Levitt said. “Home ownership is recognized as the cornerstone of the American Dream. We will not sit by while that dream is denied to hard-working and deserving Americans based on discriminatory practices and algorithms.”