Federal Regulations on Fair Lending and Sexual Orientation Discrimination in the Mortgage Market
65 Pages Posted: 1 May 2023
Date Written: March 28, 2023
Abstract
This study examines whether including sexual orientation as a protected class in federal fair lending regulations mitigates discrimination against same-sex co-borrowers in home mortgages. Relative to mortgages in states with similar protections in state laws, we predict and find that the federal regulatory changes reduce the disparity in mortgage pricing between heterosexual and same-sex co-borrowers in states without state-level protections. We document that this reduction in pricing disparity is only significant for counties with higher gay or lesbian population and for lenders that are more in compliance with existing anti-discrimination laws protecting racial minorities. Supplemental analyses suggest that these results are not driven by changes in borrower credit risk or lender underwriting standards. Collectively, the evidence supports that anti-discrimination fair lending regulations at the federal level mitigate discrimination against same-sex co-borrowers in the mortgage market. Our study contributes to the DEI literature and carries important policy and societal implications.
Keywords: DEI, ESG, Banking, Mortgage, Discrimination, Same-sex, Fair Lending Fair Housing
JEL Classification: D18, G20, J15, R30
Suggested Citation: Suggested Citation