CUNA President Says NCUA Mortgage Study Is Flawed

Jim Nussle, president and CEO of CUNA.

Letter from Jim Nussle of CUNA outlines concern over data used in study, as well as potentially counterproductive outcomes.

NCUA officials are citing a flawed agency study of possible discrimination in the mortgage market to justify efforts to increase fair lending exams and staff at the agency, CUNA President/CEO Jim Nussle told House members this week.

“We fear that misguided initiatives based on this analysis may compel less rather than more progress on equity and equality issues we all care deeply about and, if broadly socialized, is quite likely to drive credit union members, especially minority members, away from consumer-friendly credit unions, producing far less favorable outcomes for many borrowers,” Nussle wrote to the House Financial Services Committee.

The panel held a hearing featuring banking and credit union regulators on Wednesday.

Background on the Study

NCUA Chairman Todd Harper said at the agency’s recent DEI and ACCESS Summit that NCUA officials had analyzed Home Mortgage Disclosure Act (HMDA) data in warning of discrimination in the credit union mortgage industry.

That study, released at the summit, found that minority borrowers were between 1.2 to 1.9 times more likely to be denied mortgages than White borrowers.

NCUA officials also said that Black borrowers paid between two and 10 basis points more than White borrowers on average, while for Hispanic borrowers, rate premiums ranged between 10 and 13 basis points higher.

The officials did note that while the nation’s largest credit unions were included in the analysis, more than 3,500 credit unions were not.

Inside the Letter

In his letter, Nussle wrote that the study cites HMDA data that ignores key factors used in either pricing or underwriting by individual lenders, including residency and employment stability requirements, bankruptcies, and previous foreclosures.

He said the data does not account for the possibility that minorities may be selecting different types of institutions when applying for loans or may be engaged in less price shopping for favorable rates.

“Credit unions are living up to their statutory mission of meeting the credit and savings needs of members, especially those of modest means,” Nussle stated. “Flawed policies—most especially around additional fair lending oversight and the supposed need for more resources in this arena—are unfounded.”