Reply to Woah, Navy Federal is hella racist

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=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. [/quote]

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. [/quote]

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). [/quote]

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. [/quote]

That was exactly my hypothesis! [/quote]

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