Don ' t Assume That Gay Couples Face Mortgage Discrimination

A study by Iowa State researchers that has gotten some media attention at places likeNBC News finds that mortgage lending to same-sex applicant pairs is associated with higher rates of loan rejection and slightly higher interest rates. The study is already being cited in support of the Equality Act, a bill that, among many other provisions expanding the scope of federal law, would extend t he federal Fair Housing Act to cover sexual orientation.  There are reasons, however, to approach the findings with caution. To begin with, lenders currently have an economic incentive to underwrite loans correctly and compete for all profitable business. Beyond that, studies that find positive (even if thin) evidence of discrimination tend to get reported and amplified heavily, while those with null results get ignored. The first point to get on the table here is that same-sex couples are decidedly *not* distributed randomly across all sorts of neighborhoods. In particular, in common observation, male couples have long tended to be overrepresented in neighborhoods that are undergoing various stages of renovation, often associated with upward movement of real estate values. Some of these neighborhoods are run-down or even crime-ridden when the same-sex couples start moving in. Some  have finished the process of “arriving” and have become pricey and desirable (although the gay couples might choose to move on at or before that point).  There are at least two possible mechanisms by ...

Source: Cato-at-liberty - April 19, 2019 Category: American Health Authors: Walter Olson Source Type: blogs