New Lending Rule Targets LGBTQ Discrimination

A lesbian couple are in their kitchen.
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Lenders cannot discriminate against applicants on the basis of sexual orientation or gender identity under a new interpretation of existing protections against sex discrimination, the Consumer Financial Protection Bureau (CFPB) said Tuesday.

The new interpretive rule follows a landmark Supreme Court decision in June of last year in which the court ruled that the Civil Rights Act’s ban on sex discrimination also encompasses sexual orientation and gender identity discrimination. The CFPB said the rule clarifies its 2016 statement asserting that both types of discrimination fall under protections afforded by the Equal Credit Opportunity Act (ECOA) of 1974.

“In issuing this interpretive rule, we’re making it clear that lenders cannot discriminate based on sexual orientation or gender identity,” CFPB Acting Director David Uejio said in a statement. “The CFPB will ensure that consumers are protected against such discrimination and provided equal opportunities in credit.”

The CFPB, a watchdog agency created in the wake of the 2008 financial crisis to ward off predatory lending, had been studying whether the Supreme Court decision should affect its interpretation of the ECOA. Decades ago, the ECOA was meant to end what the CFPB says were common sexist practices such as discounting a married woman’s income in a credit application. 

The new interpretation confirms that lenders cannot deny loans or credit because individuals identify as LGBTQ or don’t subscribe to actual or perceived stereotypes. 

An analysis of national mortgage data from 1990 to 2015 showed same-sex couples who applied for mortgages were 73% more likely to be denied compared to different-sex applicants, according to a 2019 journal article from researchers at Iowa State University.