Woah, Navy Federal is hella racist

[Anonymous]

Did anyone read this? It’s insane:

https://www.cnn.com/2023/12/14/business/navy-federal-credit-union-black-applicants-invs/index.html

Navy Federal has a higher conventional mortgage approval rate for white applicants making less $62K than black applicants making over $140K 😳

[Anonymous]

Well that’s gonna be a PR problem for them

[Anonymous]

Yeah, I'm following it too. Its terrible. Glad it got exposed. I think credit unions skate under the radar on these areas that the big banks have to manage meticulously due to regulation and oversight.

[Anonymous]

I used to work in fair lending, and yes, these numbers are really big. I am curious to find out what it’s attributable to in their automated underwriting or practices. The only thing I can think of is some financial characteristic unique to black servicemembers - but what could that be? Does their underwriting not weight military pensions properly? Are white borrowers asking for and getting manual overrides at higher rates?

Here’s a theory: there is something wrong with the CU’s underwriting that penalizes a factor unique to servicemembers. There are a few CU loan officers in white-majority zip codes (NoVa?) that have figured out how to underwrite these manually, which is how the disparity results.

[Anonymous]

I mean, this is devastatingly awful:

[Anonymous]

Anonymous wrote:Yeah, I'm following it too. Its terrible. Glad it got exposed. I think credit unions skate under the radar on these areas that the big banks have to manage meticulously due to regulation and oversight.

Credit unions still have to comply with Fair Lending Act and CRA. But NCUA is such a weak and out-of-their-depth regulator compared to the FRB, OCC, or FDIC. And with these super sized credit unions, like NavyFed, they are becoming a big concentration of risk.

[Anonymous]

Anonymous wrote:Well that’s gonna be a PR problem for them

🙄 yes the only issue here is a PR problem for the CU

let’s ignore that home ownership has been the traditional path to middle class financial security and that Blacks have been systematically limited in their access for the past 150 years

[Anonymous]

Anonymous wrote:I used to work in fair lending, and yes, these numbers are really big. I am curious to find out what it’s attributable to in their automated underwriting or practices. The only thing I can think of is some financial characteristic unique to black servicemembers - but what could that be? Does their underwriting not weight military pensions properly? Are white borrowers asking for and getting manual overrides at higher rates?

Here’s a theory: there is something wrong with the CU’s underwriting that penalizes a factor unique to servicemembers. There are a few CU loan officers in white-majority zip codes (NoVa?) that have figured out how to underwrite these manually, which is how the disparity results.

Agreed. White loan officers are likely providing lower income white borrowers with manual overrides to the bank’s underwriting policies, but not providing the same courtesy to other ethnic groups. This results in a disparate impact with racially biased results. Dummies.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Well that’s gonna be a PR problem for them

🙄 yes the only issue here is a PR problem for the CU

let’s ignore that home ownership has been the traditional path to middle class financial security and that Blacks have been systematically limited in their access for the past 150 years

I am sorry my sardonic tone didn’t carry through. That’s the internet for you.

[Anonymous]

https://www.dcurbanmom.com/jforum/posts/list/1174066.page

[Anonymous]

Anonymous wrote:Well that’s gonna be a PR problem for them

Their insurer too.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I used to work in fair lending, and yes, these numbers are really big. I am curious to find out what it’s attributable to in their automated underwriting or practices. The only thing I can think of is some financial characteristic unique to black servicemembers - but what could that be? Does their underwriting not weight military pensions properly? Are white borrowers asking for and getting manual overrides at higher rates?

Here’s a theory: there is something wrong with the CU’s underwriting that penalizes a factor unique to servicemembers. There are a few CU loan officers in white-majority zip codes (NoVa?) that have figured out how to underwrite these manually, which is how the disparity results.

Agreed. White loan officers are likely providing lower income white borrowers with manual overrides to the bank’s underwriting policies, but not providing the same courtesy to other ethnic groups. This results in a disparate impact with racially biased results. Dummies.

I just have a hard time believing this is being done overtly - could it be that certain offices that happen to be majority white borrowed have figured it out?

The other weird thing is that NFCU actually apparently has a higher Black loan origination rate than average. So this is all about denials and not approvals (in real numbers).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I used to work in fair lending, and yes, these numbers are really big. I am curious to find out what it’s attributable to in their automated underwriting or practices. The only thing I can think of is some financial characteristic unique to black servicemembers - but what could that be? Does their underwriting not weight military pensions properly? Are white borrowers asking for and getting manual overrides at higher rates?

Here’s a theory: there is something wrong with the CU’s underwriting that penalizes a factor unique to servicemembers. There are a few CU loan officers in white-majority zip codes (NoVa?) that have figured out how to underwrite these manually, which is how the disparity results.

Agreed. White loan officers are likely providing lower income white borrowers with manual overrides to the bank’s underwriting policies, but not providing the same courtesy to other ethnic groups. This results in a disparate impact with racially biased results. Dummies.

I just have a hard time believing this is being done overtly - could it be that certain offices that happen to be majority white borrowed have figured it out?

The other weird thing is that NFCU actually apparently has a higher Black loan origination rate than average. So this is all about denials and not approvals (in real numbers).

(But to add - NFCU ought to have found this in their own fair lending reviews, as should have their bank examiners. I wonder if CNN’s data analysis is wrong.)

[Anonymous]

I thought applications couldn’t ask race?

[Anonymous]

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.