Woah, Navy Federal is hella racist

[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.

Does this analysis not control for that?

[Anonymous]

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?

[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).

My guess is that loans officers see self-segregated pools of applicants. Loan officers in NoVA are dealing largely with white military applicants, while loan officers in MD see largely black military applicants. This results from the history of segregation in this region, where blacks were much slower to gain de facto property rights in VA + active school segregation for much longer in NoVA.

If the NoVa loan officers have figured out how to manually override the bank’s underwriting standards, you’ll get less rejections for white borrowers. If MD loan officers are strictly applying the lending standards to all borrowers, you’ll get more rejections overall, and especially concentrated in black borrowers because so many more buy in MD than NoVA.

Left hand is not talking to the right hand. And maybe there is even some intracompany competition between MD and VA loan officers, where MD loan officers don’t know about the overrides happening in NoVA.

Again this is all spitballing. NavyFed is going to have to explain themselves in short order to NCUA and in court.

[Anonymous]

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

They all ask, you don’t have to disclose. Also some people have been into the branch, have provided copies of their IDENTIfication or otherwise present as black (name, etc)

[Anonymous]

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.

[Anonymous]

lol to people who are shocked there is systemic racism in housing.

Did you just wake from a coma?

[Anonymous]

Anonymous wrote:lol to people who are shocked there is systemic racism in housing.

Did you just wake from a coma?

The military as an institution is a lot blacker than the public at-large. You’d think NavyFed would have better systems in place to prevent this sort of discrimination.

I expect podunk rural ag bank in Nebraska to be pretty racist. But not NavyFed. They need to clean house.

[Anonymous]

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.

[Anonymous]

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.

[Anonymous]

I thought we were assured systemic racism was a fiction so we don’t need to talk about things like equity and DEI.

[Anonymous]

Here is another data point and racial disparities of approval by cities:
https://www.redfin.com/news/mortgage-denials-by-race-united-states/

[Anonymous]

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.

“Other than credit history” is the field that NavyFed selected when filing their HMDA disclosures. If they rejected a borrower based on credit history, they would’ve selected that. So there’s nothing else for CNN to report because there’s no other data available to CNN for them to drill into. NavyFed selected “other than credit history.”

[Anonymous]

Loan approval rests more on credit score and debt than it does on income. And I'd bet $50 blacks credit by and large is crap compared to whites.

[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.

“Other than credit history” is the field that NavyFed selected when filing their HMDA disclosures. If they rejected a borrower based on credit history, they would’ve selected that. So there’s nothing else for CNN to report because there’s no other data available to CNN for them to drill into. NavyFed selected “other than credit history.”

That’s interesting — so that’s a check-the-box field, not a selection from a list of reasons?

[Anonymous]

Anonymous wrote:Loan approval rests more on credit score and debt than it does on income. And I'd bet $50 blacks credit by and large is crap compared to whites.

According to the articles I posted above the average black credit score is 677. I have friends in big mortgage companies and I believe their lowest approval score is 620 (but Navy Fed likely has a higher cut off) so just about 40% of black applicants would be rejected on that alone and if you factor in a low score plus debt that probably accounts for the other 10%.

So how are the other banks making their stats look better? My guess, but I've yet to find data to support it is that they get 1 application for every 10 that Navy Fed gets.

So, again