Longtime Manager Voluntarily Dismisses Whistleblower Lawsuit Against Navy Federal

An assistant manager at Navy Federal Credit Union voluntarily dropped her lawsuit that alleged the $131 billion credit union retaliated against her for blowing the whistle on mortgage lending practices she claimed were illegal.

Michelle Stevenson, a 20-year Navy Federal employee who served as an assistant manager of Navy Federal’s mortgage underwriting in Herndon, Va., filed a “notice of voluntary dismissal with prejudice,” which was approved by a federal judge in Alexandria, Va., last month.

A lawsuit dismissed with prejudice means it is dismissed forever and it cannot be brought back before the court. Stevenson was on disability leave when the lawsuit was originally filed by her in July because of what she described as extreme emotional distress from the credit union’s alleged retaliation.

Stevenson and her lawyer did not respond to CU Times‘ phone and email requests for comment as to why they decided to voluntarily dismiss the lawsuit.

“Navy Federal remains committed to abiding by all applicable laws and regulations in service of our members, and we are pleased to see this case dismissed,” a Navy Federal spokesperson said in a prepared statement Thursday.

Stevenson joined Navy Federal in 2000 and received four promotions and annual salary increases. She became an assistant manager for the credit union’s mortgage underwriting in 2017 and was responsible for more than 40 direct reports.

In that same year, she learned that Navy Federal was taking compensating factors into account when issuing loans, but Stevenson alleged the credit union was not requiring verification and documentation for compensating factors.

Although financial institutions are allowed to consider compensating factors when considering issuing mortgages, federal law requires that the compensating factors be verified and documented, according to the lawsuit.

Stevenson also claimed Navy Federal mortgage underwriters were being pressured to issue loans without reasonable good faith determination that the members could repay those loans.

According to the lawsuit, Navy Federal’s alleged retaliation began in October 2018 when Stevenson started being excluded from emails and projects. In that same month, she was informed by her supervisors that she was being transferred to training to help develop underwriting training materials. In her new training role, it’s alleged that Navy Federal took away the 40 employees who previously reported to Stevenson. She was provided with no performance expectations for her new job but was asked to write descriptions for job trainer positions for which there were no candidates. She was also given menial tasks, according to the lawsuit.

Stevenson sued Navy Federal for violating the federal whistleblower provision of the Dodd-Frank Act that protects employees from termination or discrimination for reporting violations. She also sued the credit union for violating Virginia’s whistleblower protection for employees who report violations of any federal or state law or regulation.

In response to Stevenson’s lawsuit, the credit union said, “Navy Federal Credit Union complies with applicable law, and we are confident this issue will be appropriately resolved.”

Navy Federal never filed any documents in federal court in response to Stevenson’s allegations.