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Applying for a mortgage is one of the first steps couples take when buying a home, but a new study suggests lenders are less likely to approve same-sex couples.
Researchers in Iowa State University's Ivy College of Business analyzed national mortgage data from 1990 to 2015 and found the approval rate for same-sex couples was 3 to 8 percent lower. The study also included a smaller dataset with more detail about applicants' work history and credit worthiness. Based on this data, same-sex applicants were 73 percent more likely to be denied than heterosexual couples.
Couples - Interest - Fees - Co-authors - Hua
Same-sex couples who were approved paid more in interest and fees. Co-authors Hua Sun and Lei Gao, associate and assistant professors of finance, respectively, say the difference in finance fees averaged less than .5 percent, but combined added up as much as $86 million annually. The research, published by the Proceedings of the National Academy of Sciences, found no evidence that same-sex couples had a higher default risk.
"Lenders can justify higher fees, if there is greater risk," Gao said. "We found nothing to indicate that's the case. In fact, our findings weakly suggest same-sex borrowers may perform better."
Mortgage - Applicants - Orientation - Researchers - Perception
While mortgage applicants are not required to disclose their sexual orientation, the researchers say perception is just as damaging in terms of discrimination. The Fair Housing and Equal Credit Opportunity acts prohibit discrimination based on a borrower's race, gender, marital status or religion, but neither specifically lists sexual orientation.
The researchers say the findings illustrate a need for change to make the law fair for everyone....
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