Same-Sex Couples Denied a Mortgage More Often

Homeownership continues to be a hallmark of the American dream. However, barriers such as a lack of sufficient income, struggles with bad credit, excessive debt, and wage stagnation prevent some Americans from achieving it.

Unfortunately, homeownership may be more of a hurdle for same-sex couples. According to a study by the Proceedings of the National Academy of Sciences, same-sex couples who apply for mortgages are rejected more frequently and often offered higher interest rates than heterosexual couples. The study discovered that same-sex couples had a 73% greater chance of being denied a mortgage than their heterosexual counterparts with similar financial situations. Additionally, same-sex couples who were approved for mortgage loans faced rates and fees that were an average of 0.2% higher – adding up to $86 million per year.

It’s worth noting that although the study was conducted in 2019, it’s one of the newest ones available examining why same-sex couples might be denied mortgages. Since another look at the issue was needed, earlier this year, industry professionals revealed that the LGBTQ+ community is still experiencing lower homeownership rates than heterosexuals.

Here’s a closer look at the questions around why same-sex couples may be denied mortgages at higher rates than their heterosexual friends, colleagues, and neighbors.

Does the Fair Housing Act apply?

The Fair Housing Act states that it’s illegal to discriminate against anyone seeking a mortgage or housing assistance. It prohibits discrimination based on race, color, national origin, religion, sex, familiar status, and disability. Where the Fair Housing Act stops however, is that it does not specifically ban discrimination on the basis of sexual orientation or gender identity.

Recently, the Supreme Court stated that employment discrimination related to sexual orientation or gender identity is illegal under federal civil rights law. The Court found that the Civil Rights Act of 1964 prohibits discrimination based on sex, which it says includes gender identity and sexual orientation.

Another recent event in this area was the signing of the Virginia Values Act, enacting protections against discrimination in housing as well as employment for the LGBTQ+ community. The Act prohibits discrimination based on sexual orientation and gender identity. Twenty other states have also created laws protecting people from discrimination on the basis of sexual orientation and gender identity in housing and employment.

It is possible that the Supreme Court ruling and LGBTQ+ protections from state laws will lead the way for a change in the Fair Housing Act tor other federal laws to offer more protections against discrimination.

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What is lending discrimination?

Under current federal laws, lending discrimination occurs when a lender makes an adverse action against an individual that is in a protected class, as outlined in the Equal Credit Opportunity Act (ECOA). Remember though, this only addresses overt discrimination. Disparate impact discrimination, where more subtle actions (or actions with no discriminatory intent) have a disproportionate effect on a protected group, is another kind of discrimination. Here, according to the ECOA, lending discrimination based on the following is illegal:

• Age

• Sex

• Race

• Religion

• Color

• National origin

• Physical or mental handicaps

If you’re in a protected class and find yourself in any of these situations, you may be a victim of lending or housing discrimination. For example:

• A mortgage lender is unwilling to share current rates or provides you with higher rates than those available to others in a similar financial situation.

• A real estate agent states that they’re “too busy” to help you find a home.

• A seller informs you that their home suddenly went off the market.

• A lender mistreats you or ignores you whenever you reach out to them for information or assistance.

Lending and housing discrimination affects more of us than just the person or couple directly involved. Equality in lending opportunities can work to protect many different groups, bringing more people into the housing market and creating more stable and economically viable communities.

Steps to take if you’re facing lending discrimination

If you are part of a same-sex couple denied a mortgage based on discrimination, or facing unfair treatment for any other reason, here are some steps you can consider taking to protect yourself.

• Document everything: Jot down or gather any evidence of interactions or exchanges you’ve had with the lender or individuals you suspect have discriminating against you.

• Check the Attorney General’s Office or website for your state: Since many states have their own equal credit opportunity laws, it’s a good idea to find out from your state’s Attorney General if your lender violated any laws protecting LGBTQ+ citizens.

• File a complaint for a violation: In the event your case concerns a violation with the ECOA, visit gov or call 855-411-2372 to file a complaint. If you suspect it involves a violation of the Fair Housing Act, you can visit HUD’s website and file a complaint online or call their toll-free discrimination hotline at (800) 669-9777.

By filing a complaint and standing up against lending discrimination, you can protect others from being discriminated against by the same lender or individual — as well as stand up for yourself. Although protections for same-sex couples may be more limited now than for other groups who face discrimination, this may not always be the case in the future.

Protect your finances and future

Looking for more posts on how to ensure your financial rights are protected, how to manage your debt, and improve your personal and business finances during the pandemic and more normal times? Come back to our blog each week for more information.

Learn More

• What You Should Know About Credit Discrimination (Freedom Debt Relief)

• The Good News and Bad News About Your Mortgage During Covid-19 (Freedom Debt Relief)

• What Happens if You Can’t Pay Rent This Month, or Next? (Freedom Debt Relief)

• Housing Discrimination Under the Fair Housing Act (U.S. Department of Housing & Urban Development)

• Fair Lending Program (U.S. Department of Justice)