July 31, 2021

MP Now News

Mortgage News

Mortgage Lending for LGBTQ+ People

Members of the LGBTQ + community have long suffered discrimination in relation to employment, housing and access to “public accommodation” such as hotels and restaurants. While 92% of adults from lesbian, gay, bisexual, and transgender countries said in a 2013 survey by the Pew Research Center that society has gained more acceptance over the past decade, The law has tended to lag behind. A prime example are the laws that regulate mortgage credit.

New laws – or changes to previous laws – aimed at eliminating bias now use language that includes “sexual orientation and gender identity.” These two terms offer safeguards that encompass the broad spectrum of members of the LGBTQ + community: lesbian, gay, and bisexual refer to a person’s sexual orientation, and transgender refers to a person’s gender identity. Q refers to people who identify as either “queer” or “questioning,” while the plus sign stands for people with sexual orientations or gender identities other than LGBTQ.

The central theses

  • Neither the Fair Housing Act nor the Equal Opportunities Act specifically prohibits discrimination against LGBTQ + people on mortgage loans.
  • However, federal agencies have begun to interpret these laws to include LGBTQ + people.
  • The proposed federal equality law would change the existing laws to explicitly prohibit LGBTQ + discrimination in housing, credit and other areas.
  • Some state and local governments have their own laws to protect LGBTQ + people from discrimination.

Mortgage Credit Distortion: The Proof

A 2019 study by Hua Sun and Lei Gao of Iowa State University found that between 1990 and 2015, same-sex couples were 73% more likely to be rejected for a mortgage than similarly qualified same-sex couples. In addition, same-sex couples who were approved for mortgages paid about 0.02% to 0.2% more interest and fees on average.

The researchers found that the difference in approval ratings had nothing to do with same-sex couples being less creditworthy. In fact, they concluded, “We find that same-sex borrowers are less risky overall because they have similar outcomes Failure risk but lower Prepayment risk. “ Although same-sex couples were less risky borrowers, they were still more likely to be turned down on a mortgage.

Another 2019 study conducted by J. Shahar Dillbary and Griffin Edwards of the University of Alabama looked at the effects of both race and sexual orientation on approval rates for more than 5 million FHA mortgage applications. It found that same-sex male couples, regardless of race, were less likely to be eligible for a mortgage than white heterosexual couples, with black male couples having the highest rejection rate and white male couples the lowest. However, lesbian couples fared better. They were either statistically indistinguishable from white heterosexual couples in terms of their approval ratings or even more likely to be admitted.

The barriers many LGBTQ + people face in getting a mortgage have made it more difficult for them to obtain affordable and stable housing. A 2020 study by the Williams Institute at UCLA School of Law found that 70.1% of non-LGBT adults own a home, but only 49.8% of LGBT adults. In other studies, the institute found that home ownership “is even lower among LGBT minorities and transgender people”.

In addition, many LGTBQ + people are looking for jobs with LGBTQ + friendly businesses and households to accept parts of the country. This often means living in cities where housing costs, including mortgage payments, can be well above the national average.

Federal initiatives to ensure LGBTQ + rights

The Fair Housing Act, Passed in 1968 and amended in 1988, protects Americans from discrimination based on race, color, national origin, religion, gender, marital status, and disability. However, no explicit mention is made of sexual orientation or gender identity. A bill introduced in 2019, the Fair and Equal Housing Act, would add “sexual orientation” and “gender identity” to the list.

Meanwhile, those omissions in federal housing law have created a shield against other discriminatory lending practices, Dillbary and Edwards say in their report. “Explicit sexual orientation discrimination is not only permissible, it can also be used as a ‘defense’ by lenders,” they write. “For example, a lender discriminating against a black applicant could escape liability if the source of the discrimination is found not to be the applicant’s race (a protected trait that gives rise to liability) but rather his sexual orientation.”

There may be changes at the federal level. On his first day in office, President Joe Biden signed an executive order entitled “Preventing and Combating Discrimination Based on Gender Identity or Sexual Orientation”. The executive order, which calls on the heads of agencies to review and revise their policies in accordance with this objective, states: “People should be able to … secure a roof over their heads without.” Being exposed to gender discrimination. “

Similar to the Fair Housing Act, the Equal Opportunities Act 1974 banned lending discrimination based on race, color, religion, national origin, gender, marital status, age, or receiving public support, but omitted any reference to sexual orientation or gender identity. However, on March 9, 2021, the Consumer Financial Protection Bureau (CFPB) announced that it would interpret the law’s prohibition of gender discrimination to include sexual orientation and gender identity discrimination.

“By issuing this rule of interpretation, we are making it clear that lenders cannot discriminate based on their sexual orientation or gender identity,” CFPB Acting Director David Uejio said in the announcement. “The CFPB will ensure that consumers are protected from such discrimination
and offered equal credit opportunities. “

The CFPB also said it looks forward to “working with Congress on the Gender Equality Act which, if entered into force, would codify consumer protection from sexual orientation and gender discrimination in all financial products and services.” The Equal Opportunities Act, passed in the House of Representatives on February 25, 2021, awaiting action in the Senate, would prohibit discrimination based on gender, sexual orientation and gender identity in the areas of housing, credit, employment, education and other areas.

State and local initiatives

According to the U.S. Department of Housing and Urban Development, 22 states and the District of Columbia have laws outlawing housing discrimination based on sexual orientation, and all but two also prohibit discrimination based on gender identity or gender expression.

While this list includes some of the most populous states in the country – such as California, Illinois, and New York – GLAAD, an advocacy group, claims that “these laws only cover about 48% of the American LGBT population, leaving an unacceptable majority of LGBTQ people in favor of are prone to legitimate discrimination. “

In addition to states, at least 330 municipalities “fully and expressly prohibit discrimination against LGBTQ people in employment, housing and public housing” the
Movement Advancement Project, a non-profit research organization.

For example, in Florida, where there is no nationwide anti-discrimination law, 12 counties (out of 67), 28 cities, and four other municipalities have ordinances prohibiting discrimination based on sexual orientation, as well as 12 counties, 26 cities, and five other municipalities that let them use gender identity cover. As a result, the The organization estimates that 60% of the state’s population is affected by such laws. However, in some other states this percentage is only 0%.

At best, “local ordinances, state laws, federal court judgments and more create a patchwork of non-discrimination protection for LGBTQ people across the country,” notes the Movement Advancement Project.


The US Department of Housing and Urban Development and the Consumer Financial Protection Bureau have online complaint forms for people who believe they have been discriminated against.

Where to get help when you need it

A number of government agencies and nonprofits are filing complaints and taking action on behalf of LGBTQ + people who believe they have been discriminated against in violation of applicable law. They include:

United States Department of Housing and Urban Development (HUD). While the Fair Housing Act doesn’t specifically cover discrimination based on sexual or gender orientation, the HUD – which administers the law – now requires individuals to identify themselves as LGBTQ + make a complaint if they think they have been discriminated against. “HUD is committed to investigating fair living violations of all individuals regardless of their sexual orientation or gender identity,” the agency says.

Bureau of Financial Consumer Protection (CFPB). The CFPB deals with discrimination complaints
against lenders and Mortgage broker based on the Equal Credit Opportunity Act (ECOA). This law, like the Fair Housing Act, does not mention LGBTQ + discrimination per se, but the CFPB website states, “Currently the law supports arguments that the prohibition of gender discrimination also provides broad protection against discrimination based on sex a consumer’s gender identity provides sexual orientation. “

American Civil Liberties Union (ACLU). The ACLU has one Online form specifically for filing LGBTQ + and HIV-related discrimination complaints. The organization says, “We will let you know if we can provide legal assistance. If we cannot, we will try to find another organization that may be better equipped to help.”

Lambda Legal. This non-profit civil rights organization for the LGBTQ + community has an online organization Counseling center This provides information and resources on housing and other types of discrimination, but does not provide individual legal advice.

In addition to these national resources, your state or local housing department, as well as a local legal aid society or private attorney with expertise in discrimination issues can help.