Prior to the 1970s, lenders would commonly engage in a discriminatory practice known as “income discounting,” when the income of a woman applying for credit would be devalued by a lender based on the expectation that her income was not stable because she was unlikely to remain in the workforce.
As a result of this type of gender discrimination, Congress passed the Equal Credit Opportunity Act (ECOA) in 1974 to prohibit discrimination against applicants for credit “on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract)” or “because all or part of the applicant’s income derives from any public assistance program.”
So why – over 40 years later – are we bringing up again the issue of discrimination when the reality is that we have made great advances since those days to protect women and other groups who have been historically discriminated against?
Well, do you notice any one group missing from the extensive list of ECOA protected classes? That’s right, sexual orientation is not a protected class under ECOA.
In fact, there is no federal law that protects applicants for credit from being discriminated against on the basis of sexual orientation. Fifteen states (currently) and the District of Columbia have passed laws to protect the LGBTQ+ community from discriminatory practices, but there is nothing yet at the Federal level.
So now consider this scenario:
Mark and John walk into their local community bank. They are first-time home buyers looking to get a mortgage to buy a place together. They both have excellent credit scores and stable incomes that allow them to comfortably qualify for the loan together. During casual conversation, the loan officer picks up on the fact that Mark and John are a gay couple. The loan officer believes that homosexuality is a sin and refuses to help them with their mortgage application. If Mark and John are in a State that does not offer state-level protection against credit discrimination on the basis of sexual orientation, they may have no recourse under our judicial system against this loan officer and his company.
How does this blatant act of injustice make you feel? Is this really an issue we want to leave to the individual States to resolve?
The basic premise of our country –masterfully stated in our Declaration of Independence – is that all of us are “endowed” with certain “inalienable rights” and that “among these are Life, Liberty and the pursuit of Happiness.” How can we guarantee an individual’s inalienable right to the “pursuit of Happiness” when we allow a loan officer to reject a loan applicant for being gay?
Today, we invite all of you to stand behind an effort to amend ECOA to include sexual orientation and gender identity as protected classes: the Freedom from Discrimination in Credit Act (FDCA). FDCA simply extends the basic protections afforded under ECOA to members of our LGBT community. It was introduced to Congress on June 13, 2013 and again in May 2017.
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