Woah, Navy Federal is hella racist

[Anonymous]

Anonymous wrote:Navy Federal had stricter standards for POC vs whites, so that should mean that whites had a much higher default rate as they got more high risk loans?

Not necessarily. Whites are more likely to receive an inheritance than other groups and tend to have family members to borrow money from etc. My in laws for example have been borrowing money from friends and family to pay their mortgage forever. And they’re college educated from UC/UMC background, just kind of lazy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yep:
https://www.investopedia.com/average-credit-scores-by-race-5214521

Explains everything except Asian. Asians with a military connection have lower than average credit scores?

CNN used HMDA data, which does not provide credit scores. So they can’t control for that.

HOWEVER. CNN writes “…most of the Navy Federal applications that were denied are listed as being rejected for reasons other than “credit history.””

So they were not being rejected due to their credit history, which would flow thru to credit scoring.

And yes, Asians with military connection are likely more working class, shorter family history in the U.S., etc than NavyFed members who are white.

It would be interesting to know if NavyFed members who are white are actually military. I bet majority are family of military who inherited rights to NavyFed account and pretty far removed from military service. Whereas most black/Asian/Hispanic NavyFed members are actually direct military (either themselves or a parent). White NavyFed members are probably more likely to be college educated, white collar, and probably two-generations removed from military service.

The fact that CNN doesn’t mention what those “reasons other than credit history” are is a curious and in my mind quite telling omission. If those reasons supported the implied narrative of racial discrimination, I’m sure they would have been mentioned.

I don't buy the statement. The #1 reason to deny a mortgage is credit score.

I think what people fail to understand is that you can build a system that doesn't discriminate and is only "looking at the numbers" but the numbers correlate to something like gender or race. Therefore you built a system that does, in fact, discriminate based on race.

But, bigger question here. Does that mean that other lenders discriminate? Easiest way to make your numbers look better is discourage black applications knowing they'll get rejected. So all of a sudden you have a much higher approval rating because only qualified black applicants applied.

This isn't true. There are many many studies that white applicants with lower income get approved at higher rates with the same credit scores. This is not new.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Weird. Black male here who applied for a mortgage this year and NFCU was actually the easiest to work with and easily got approved and they are currently my lender. Never had any problems with them. Maybe I’m one of the outliers.

Forgot to mention, this was for a 650k conventional loan, 30 year fixed back in February of this year.

We applied for a loan half that, conventional, 20% down, 30 year fixed, with high credit scores and they gave us a run around for weeks. Almost messed up closing. You got lucky. Pen Fed was far easier to work with but they did lose our paperwork but thankfully I had a copy. They didn't sell our loan, allowed us recasts and made refinancing very easy (USAA sucked and sold our loan multiple times).

[Anonymous]

Anonymous wrote:Getting loans approved involves a lot more than just income and credit score. Even if black applicants didn't have lower credit scores (which they do), you have to stay on top of things throughout the process - verify your assets, bank accounts, pay stubs, tax returns. You must not have above a certain percentage of other outstanding debt (perhaps black applicants more likely to have large car loans?). You must prove where your financing comes from - that it isn't a family member loaning you money. You have to be careful not to take out new credit or loans while you are going through the approval process (many people make this mistake because moving requires other outlays - that 0% for 12 months furniture store credit card is awfully tempting). There are numerous steps at which the process could go awry and certain groups may be more likely to make these admittedly seemingly small errors that derail the loan approval

We did all that and Navy Fed gave us a huge run around. We had no debt but a small car note, high credit scores, downpayment in the bank with proof, etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:They are terrible. I have had nothing but issues with them for a mortgage and banking. Never again would I use them.

I think you’re in the minority. The article led with NF is the largest credit union. So they must be doing something right.

I’m thinking this guy got declined for a loan at Navy Federal and then went somewhere else and got a loan approved. This guy is an exception case.

most of Navy Federal clients are lower income, service members, who cannot afford a mortgage. Most that are declined from Navy Federal, would also be declined from other places. A lot of these people probably would not be able to get a credit card or other type of loan from another bank
either.

One reason the disparity is probably so great, is that Bank of America, Wells, city, capital one… average black clientele at these banks would get approved for a mortgage loan regardless.

Lower income service members have the VA loan. Any service member can afford a mortgage via a VA loan (no down payment required, no PMI, preferential rates, better oversight of inspection process, etc) as long as they purchase a property that suitably affordable on their income.

NavyFed’s issues clearly stem from black borrowers who don’t have access to the VA loan program. That is, they are civilian members of the credit union not eligible for VA loans.

The va loan rates are not better. All active duty and retirees as well as veterans can get a va loan. Your post. Ames no sense.

VA loan rates are absolutely better if you’re a low income service member in your 20s with a 1% down payment and a thin credit history. VA loan will be beat a conventional loan any day of the week for that high credit risk.

The bank takes very little risk with a VA loan so long as the go through the eligibility and verification checklist since it goes to the GSEs.

They are only good if you have bad credit and no downpayment. We had a good credit history, no debt but a car note, and 20% down and the rate they gave us was much higher than the conventional loan we got. I tried to refinance with a VA loan and its rate was till higher. We were low income enlisted at the time.

[Anonymous]

Anonymous wrote:My BIL worked at a bank as a mortgage processor. Lots of Spanish people got denied simply cause they could not figure out application process. He literally would spend double the amount of time on these applications as they needed a lot of handholding.

Many had off the book jobs, some barely spoke English, many new to country. And yes they has a higher denial rate. But is that racism?

Thats not even remotely part of the discussion. We are talking about military. They can speak english.

[Anonymous]

Anonymous wrote:I mean it seems obvious to me. Credit score. Even if you make 140K but have a credit score under 600 that's not going to happen.

It's always the credit score. I have told many AAs to try to rent a privately-owned condo and do things like pay three months rent up front to get a private owner to take them. The corporate owned buildings won't touch them because when they don't pay, they have a big PR problem.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My BIL worked at a bank as a mortgage processor. Lots of Spanish people got denied simply cause they could not figure out application process. He literally would spend double the amount of time on these applications as they needed a lot of handholding.

Many had off the book jobs, some barely spoke English, many new to country. And yes they has a higher denial rate. But is that racism?

Thats not even remotely part of the discussion. We are talking about military. They can speak english.

You don't have to be in the military to join Navy Federal Credit Union. Also, the military is going hard after qualified immigrants offering a enlistment as a path to citizenship. These military members are not native English speakers.

[Anonymous]

Anonymous wrote:

Anonymous wrote:One thing to note:
CNN’s analysis is for conventional mortgages. These are mortgages with standardized terms and the lowest interest rates.

They may have been rejecting them for conventional products in order to steer them to higher priced non-conventional products like ARMs.

why wouldn’t they get VA loans?

Uh because they are not active duty or military veterans or qualified family members. You do understand that VA insured loans are a benefit to the military that is not available to everyone.

[Anonymous]

They are based in Virginia. So that’s why.

[Anonymous]

or they try not to lose money. Maybe that is the reason.

[Anonymous]

Based on the publicity around this, I am guessing that DOJ or CFPB has now launched an investigation, if there was not already one underway. They'll get access to all the loan data and will run every analysis possible. If there's any racial discrimination, I have no doubt they'll find it. But these investigations take a while (the banks tend to not be cooperative), so I wouldn't expect to hear anything for a year or two.

[Anonymous]

I will say this based on my experience with loans some have car loans, personal loans and credit card debt they are more likely to have. A high debt to income ratio.

I am always shocked at amount of car loans and personal loans credit unions do. Those same people than go looking for mortgages

[Anonymous]

Anonymous wrote:

Anonymous wrote:Navy Federal had stricter standards for POC vs whites, so that should mean that whites had a much higher default rate as they got more high risk loans?

Not necessarily. Whites are more likely to receive an inheritance than other groups and tend to have family members to borrow money from etc. My in laws for example have been borrowing money from friends and family to pay their mortgage forever. And they’re college educated from UC/UMC background, just kind of lazy.

Not sure if that's true but if so the credit companies would want to factor it into their risk rating. I'd think the default ratio would be the true test of the quality of screening.

[Anonymous]

Credit union keep a lot more mortgages in books than banks.

Chase and Citi only care about credit risk as long as it takes then to securitize or sell loan. So a matter of weeks or months.

Credit Union has loans many years on books so may be stricter. That stricter standard although not races based may be difference