Woah, Navy Federal is hella racist

[Anonymous]

Not surprised. I won’t go into detail but they screwed me over once.

Eff Navy Federal.

[Anonymous]

Anonymous wrote: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

The CNN article is about turning down borrowers for conventional mortgages. These are - de facto - not held on the books of the credit union and are sold onward to the GSEs for securitization. That's what makes them "conventional" - they have to meet the GSE mortgage standards.

The CNN analysis used HMDA data to control for income, borrowers' outstanding debt, locations of property, price of property, etc. So it's not the DTI of the borrower that makes them less likely to get approved.

For those disapproved, NFCU was selecting that disapprovals were happening for reasons "other than credit history." That's a bright red flag for regulators, since it means there's some sort of qualitative judgement call by the loan officers to reject them for a conventional mortgage. We know it's not due to debt, income, home location, price of the house, or "credit history." So what else is left to reject half of black borrowers?

It doesn't look good for NFCU.

[Anonymous]

Anonymous wrote:

Anonymous wrote: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

The CNN article is about turning down borrowers for conventional mortgages. These are - de facto - not held on the books of the credit union and are sold onward to the GSEs for securitization. That's what makes them "conventional" - they have to meet the GSE mortgage standards.

The CNN analysis used HMDA data to control for income, borrowers' outstanding debt, locations of property, price of property, etc. So it's not the DTI of the borrower that makes them less likely to get approved.

For those disapproved, NFCU was selecting that disapprovals were happening for reasons "other than credit history." That's a bright red flag for regulators, since it means there's some sort of qualitative judgement call by the loan officers to reject them for a conventional mortgage. We know it's not due to debt, income, home location, price of the house, or "credit history." So what else is left to reject half of black borrowers?

It doesn't look good for NFCU.

I don't know about NFCU, but some lenders have final discretion at the end of the day. The article states that debt ratio, income, home location, credit history and home price were comparable for applicants that were accepted and rejected for mortgage.

[Anonymous]

Anonymous wrote:

Anonymous wrote: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

The CNN article is about turning down borrowers for conventional mortgages. These are - de facto - not held on the books of the credit union and are sold onward to the GSEs for securitization. That's what makes them "conventional" - they have to meet the GSE mortgage standards.

The CNN analysis used HMDA data to control for income, borrowers' outstanding debt, locations of property, price of property, etc. So it's not the DTI of the borrower that makes them less likely to get approved.

For those disapproved, NFCU was selecting that disapprovals were happening for reasons "other than credit history." That's a bright red flag for regulators, since it means there's some sort of qualitative judgement call by the loan officers to reject them for a conventional mortgage. We know it's not due to debt, income, home location, price of the house, or "credit history." So what else is left to reject half of black borrowers?

It doesn't look good for NFCU.

You don’t have to sell a conventional mortgage to Fannie or Freddie. It just meant is met guidelines. The credit union can still keep them on the books

[Anonymous]

The gap is definitely significant, but it would be helpful to have more granular data to get a clearer picture of why this is occurring. I'm curious if this discrepancy is partly attributable to family financial assistance in the home buying process.

[Anonymous]

Anonymous wrote:The gap is definitely significant, but it would be helpful to have more granular data to get a clearer picture of why this is occurring. I'm curious if this discrepancy is partly attributable to family financial assistance in the home buying process.

Family financial assistance is more likely to screw something up than to help. You can't just have a family member give you a ton of money during the process. You can either:

1. Have them give the gift limit of $18,000, which doesn't really get you too far in this market.
2. Have them give more but then there needs to be a written agreement with a set interest rate and repayment schedule, and the repayment amount will be factored into your debt to income ratio. The interest rate and repayment schedule can't violate rules established by the IRS, so no 0% loans, for example.

[Anonymous]

Anonymous wrote:I thought applications couldn’t ask race?

I mean, it's pretty obvious when one applicant is Timothy Smith and the other is DeMarcus Brown.

Name bias is why so many POC use traditionally white names on their resumes.

My SIL applied for the same jobs using her nickname Sadie instead of her given Arabic first name and was granted interviews at 4/6 places that had denied her before. The only change was her name.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I thought applications couldn’t ask race?

I mean, it's pretty obvious when one applicant is Timothy Smith and the other is DeMarcus Brown.

Name bias is why so many POC use traditionally white names on their resumes.

My SIL applied for the same jobs using her nickname Sadie instead of her given Arabic first name and was granted interviews at 4/6 places that had denied her before. The only change was her name.

HMDA requires identification of race.

[Anonymous]

Anonymous wrote:

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.

We did not take a va loan as the rates were not as good.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote: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

The CNN article is about turning down borrowers for conventional mortgages. These are - de facto - not held on the books of the credit union and are sold onward to the GSEs for securitization. That's what makes them "conventional" - they have to meet the GSE mortgage standards.

The CNN analysis used HMDA data to control for income, borrowers' outstanding debt, locations of property, price of property, etc. So it's not the DTI of the borrower that makes them less likely to get approved.

For those disapproved, NFCU was selecting that disapprovals were happening for reasons "other than credit history." That's a bright red flag for regulators, since it means there's some sort of qualitative judgement call by the loan officers to reject them for a conventional mortgage. We know it's not due to debt, income, home location, price of the house, or "credit history." So what else is left to reject half of black borrowers?

It doesn't look good for NFCU.

You don’t have to sell a conventional mortgage to Fannie or Freddie. It just meant is met guidelines. The credit union can still keep them on the books

Why would they keep a conventional mortgage on the balance sheet (50% risk weight) when it attracts 2.5x the capital requirement of selling it to a GSE and then just holding a GSE security (20% risk weight)?

That’s the arbitrage trade that banks and credit unions love.

[Anonymous]

What happened to the swim test for qualification comment, that was funny. It is the navy

[Anonymous]

Anonymous wrote:Having been a military family for 30 years, and only basing it on anecdotal experience, I would bet it's debt to income ratio. High car payments were the norm for lower ranking black soldiers. I remember driving our chevy cavalier for years while our friends were driving BMWs and fancier model Nissans.

This!

[Anonymous]

Anonymous wrote:

Anonymous wrote:I thought applications couldn’t ask race?

I mean, it's pretty obvious when one applicant is Timothy Smith and the other is DeMarcus Brown.

Name bias is why so many POC use traditionally white names on their resumes.

My SIL applied for the same jobs using her nickname Sadie instead of her given Arabic first name and was granted interviews at 4/6 places that had denied her before. The only change was her name.

Mortgage applications still want documents like your drivers license or passport, which has your picture on it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I thought applications couldn’t ask race?

I mean, it's pretty obvious when one applicant is Timothy Smith and the other is DeMarcus Brown.

Name bias is why so many POC use traditionally white names on their resumes.

My SIL applied for the same jobs using her nickname Sadie instead of her given Arabic first name and was granted interviews at 4/6 places that had denied her before. The only change was her name.

There is probably something about the algorithm that they use to determine who gets approved that is biased.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Having been a military family for 30 years, and only basing it on anecdotal experience, I would bet it's debt to income ratio. High car payments were the norm for lower ranking black soldiers. I remember driving our chevy cavalier for years while our friends were driving BMWs and fancier model Nissans.

This!

The article said it controlled for debt to income ratios.