Study Finds Widespread Sexual Orientation and Intersectionality Discrimination in Mortgage Lending

Shahar Dillbary of Alabama and Griffin Sims Edwards of the University of Alabama at Birmingham – Department of Marketing, Industrial Distribution & Economics have written An Empirical Analysis of Sexual Orientation Discrimination, University of Chicago Law Review, 2018 Forthcoming. Here's the abstract:

This study is the first to empirically demonstrate widespread discrimination across the United States based on perceived sexual orientation, sex and race in the mortgage lending process. Our analysis of over five million mortgage applications reveals that any FHA loan application filed by same-sex male co-applicants is significantly less likely to be approved compared to the white heterosexual baseline (holding lending risk constant). The most likely explanation for this pattern is sexual orientation based discrimination — despite the fact that FHA loans are the only type of loan in which discrimination on the basis of sexual orientation is prohibited. 

Moreover, we find compelling evidence to support the intersectionality theory. According to this theory when sex and race unite, a new form of discrimination emerges that cannot be explained by sexism and racism alone. The data unequivocally indicates that the race and sex of same-sex applicants play a role and result in a unique and previously unobserved pattern. This discriminatory pattern plagues every region in the U.S., and it transcends party lines (i.e., it is present in red, blue and swing states). Furthermore, upending conventional wisdom, the data reveals that big banks discriminate at the same rate as small banks, and lenders in urban environments are as discriminatory as rural lenders. Prior studies failed to reveal this phenomenon due to data constraints and design flaws. These studies relied on testers posing as applicants, and none could investigate how intersectionality influences lending practices. 

Despite the grim results, a silver lining exists. We find that the pattern of discrimination diminishes or disappears in states and localities that pass anti-sexual orientation discrimination laws. These findings have important and timely implications. In 2017 a new bill offering nationwide protection from sexual orientation credit discrimination was introduced. The same year has experienced tectonic changes in Title VII jurisprudence. Our study can reinvigorate the debate and help policy makers tailor remedies that would correct the discriminatory pattern this study unravels.

0 thoughts on “Study Finds Widespread Sexual Orientation and Intersectionality Discrimination in Mortgage Lending

  1. Edwin Bell says:

    I agree with the data provided with some exceptions. The National Mortgage Settlement Agreement (HAMP) provided a means to stay in your home and rework your financing. Unfortunately, the HAMP program was the most discriminatory act to come out of the settlement. Most homeowners were preyed upon by the servicer and crooked attorneys. Most were instructed to STOP making payments…this is a story told thousands of times….once you stop making payments, instead of providing assistance they immediately begin a foreclosure unbeknownst to the homeowner.
    Mortgage servicers are still damaging homeowner today …regardless of what happened in the past. There is more money to be earned foreclosing on homes then servicing the customers. Therefore, foreclosure is the optimum goal because that’s where the MONEY is found. Until servicers are charged with felonies and thrown in jail we will never see an end to this behavior.

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