To combat discrimination in its programs based on sexual orientation or gender identity, the U.S. Department of Housing and Urban Development published a final rule on February 3, 2012, that includes new prohibitions directed at FHA lenders.
The rule, which becomes effective on March 5, 2012, defines “gender identity” to mean “actual or perceived gender-related characteristics” and “sexual orientation” to mean “homosexuality, heterosexuality, or bisexuality.”
Under the rule, an approved lender in an FHA mortgage insurance program cannot inquire about the sexual orientation or gender identity of an applicant for, or occupant of, HUD-assisted housing or housing whose financing is insured by HUD, whether renter- or owner-occupied, for the purposes of determining eligibility for the housing or otherwise making such housing available.
The rule does not prohibit voluntary self-identification of sexual orientation or gender identity, such as for compliance with data collection requirements of state or local governments or other federal assistance programs. The timing of such voluntary disclosures is not addressed in the final rule. However, in its responses to comments received on its proposed rule, HUD states that such disclosures are allowed only after determining an individual’s eligibility for HUD assistance.
Lenders making single-family FHA-insured mortgage loans are also barred under the rule from considering actual or perceived sexual orientation or gender identity in determining the adequacy of the borrower’s income for underwriting purposes.
In its background discussion of the final rule, HUD acknowledges that the rule does not “create additional protected classes in existing civil rights laws such as the federal Fair Housing Act,” and that “sexual orientation and gender identity are not identified as protected classes” in the FHA. However, HUD also notes that discrimination based on “sex” under the FHA “includes discrimination because of nonconformity with gender stereotypes.”