Racial Disparities in Mortgage Approval Rates
José Loya of the UCLA Luskin Urban Planning faculty spoke to CNN about disparities discovered in the mortgage approval rates at the largest credit union in the nation. CNN reported that Navy Federal Credit Union approved more than 75% of the white borrowers who applied for a new conventional home purchase mortgage in 2022, but fewer than 50% of Black borrowers who applied for the same type of loan. This is the widest disparity in mortgage approval rates between white and Black borrowers of any major lender, the news organization concluded. The disparities are alarming, said Loya, who studies racial gaps in mortgage approvals and reviewed CNN’s analysis. “It does surprise me that they’re doing significantly worse than other big lenders” because of Navy Federal’s status as a credit union, he added.
As a lawyer, this article raises significant concerns about potential fair lending violations. The stark disparity in mortgage approval rates between White and Black borrowers at Navy Federal Credit Union is troubling. While disparities can occur for various reasons, the extent of the gap here warrants further investigation. It’s particularly concerning that even when controlling for factors like income and creditworthiness, Black applicants were still significantly more likely to be denied. This raises questions about whether Navy Federal’s underwriting practices might have a discriminatory impact, even if unintentional. Fair lending laws prohibit practices that result in unjustified disparate treatment based on race. This situation underscores the importance of ongoing scrutiny and potential regulatory action to ensure fair and equitable access to homeownership for all, regardless of race.