A deeper statistical analysis by CNN found that Black applicants to Navy Federal were more than twice as likely to be denied as white applicants even when more than a dozen different variables – including income, debt-to-income ratio, property value, down payment percentage and neighborhood characteristics – were the same.

Although CNN acknowledged in its report the analysis doesn't prove that Navy Federal discriminated against any borrowers, it did show significant disparities in the credit union's approval rates for borrowers of different races – and that it has larger racial gaps than many other large financial institutions.

What's more, the national news outlet acknowledged that Navy Federal has been successful at lending to minority borrowers, noting that a fourth of its conventional mortgage applicants are Black, and about 18% of the conventional loans it originated went to Black borrowers – a larger portion than almost any other large lender.

"But because of the large racial disparity in Navy Federal's approval rates, even though more Black borrowers are applying for conventional mortgage loans from the credit union, most of them are getting denied," according to CNN.

The class action lawsuit called statistics in the CNN report "damning," noting that Navy Federal approved 77% of the mortgage applications for white applicants, but only 56% of the applications from Latino applicants and 48% of the applications from Black applicants. Navy Federal's mortgage approval rates for Asians and Native Americans were 69% and 64%, respectively.

While the lawsuit extensively cited the CNN report, the 19-page class action complaint did not indicate whether the law firms conducted their own analysis to validate CNN's information, which used Home Mortgage Disclosure Act data. The law firms, Liles Parker PLLC in Washington, D.C., Dicello Levitt LLP in Chicago and Ben Crump Law PLLC in Tallahassee Fla., did not respond to CU Times' request for comment.

Navy Federal spokesperson Bill Pearson said in the CNN report that its analysis did not accurately reflect the credit union's practices because it did not account for "major criteria required by any financial institution to approve a mortgage loan." Those factors included "credit score, available cash deposits and relationship history with (the) lender," he told CNN. But that information is not available in the public mortgage data and Navy Federal declined to provide it to CNN. In addition, most of the Navy Federal applications that were denied were listed as being rejected for reasons other than "credit history."

The CNN report also has come under fire from NAFCU, CUNA and the African American Credit Union Coalition, which argued the report is misleading.

"Fair lending practices are foundational to the credit union mission; however, we acknowledge there is more work to be done to reduce disparities within our industry," the trade groups said in a prepared statement. "It's unfortunate that a recent CNN analysis misconstrued credit union mortgage lending data to paint an inaccurate picture and draw false conclusions about Navy Federal Credit Union, and the entire credit union industry. The CNN numbers failed to calculate a large number of factors, leading to a flawed headline and disingenuous narrative that misrepresents credit union mortgage lending."

Nevertheless, the lawsuit's plaintiffs, Cherelle Jacob, a 40-year-old Black woman from Washington State and Laquita Oliver, a 44-year-old Black resident of Florida, claimed their Navy Federal mortgage applications had been denied even though they believed they qualified for those loans.

Jacob and her husband, who serves in the military, earn $200,000 a year in wages, have no debt, have ample savings and both have "exceptional" credit scores above 800. They were attracted to banking with Navy Federal because of its convenience to military bases across the globe. In October 2023, they together sought a mortgage from Navy Federal to support the purchase of a modest family home. The application was denied, which upset Jacob, but she and her husband later secured a mortgage for the same property from a mortgage broker.

Oliver makes approximately $100,000 per year in salary, has good credit, a history of home ownership and very little debt. She applied for an Navy Federal mortgage to buy a $400,000 home in August 2023. After a month-long application process – which included a hard pull of her credit that lowered her credit score and for which Navy Federal charged her a fee – she was denied. When she complained, Oliver was initially ignored and then told that she could "appeal" the denial, but that such "appeal" would lead to another hard pull of her credit. Rather than risk lowering her credit or incurring any additional fees, she gave up on attaining a mortgage, according to the lawsuit.

Jacob and Oliver are suing Navy Federal for violating the Equal Credit Opportunity Act, which makes it unlawful for a creditor to discriminate against any applicant with respect to any aspect of a credit transaction on the basis of race. They are also suing the credit union for race discrimination in violation of the Fair Housing Act.

READ MORE: Oliver v. Navy Federal Credit Union.