CFPB: Discrimination By Lenders Based On Sexual Orientation And Gender Identity Is Illegal

The Consumer Financial Protection Bureau issued an interpretive rule clarifying that the prohibition against sex discrimination under the Equal Credit Opportunity Act and Regulation B includes sexual orientation discrimination and gender identity discrimination, according to a press release.

According to the CFPB, the prohibition also covers discrimination based on actual or perceived non-conformity with traditional sex- or gender-based stereotypes, and discrimination based on an applicant’s social or other associations.

"In issuing this interpretive rule, we’re making it clear that lenders cannot discriminate based on sexual orientation or gender identity," said CFPB acting director David Uejio. "The CFPB will ensure that consumers are protected against such discrimination and provided equal opportunities in credit."

According to the CFPB, in 2016, in response to an inquiry from Services & Advocacy for GLBT Elders, the CFPB indicated that the law supports arguments that the prohibition against sex discrimination also affords broad protection from discrimination based on an applicant’s sexual orientation and gender identity under ECOA. On June 15, 2020, the U.S. Supreme Court issued a landmark decision in Bostock v. Clayton County, Georgia, 140 S. Ct. 1731, 207 L. Ed. 2d 218 (2020), holding that the prohibition against sex discrimination in Title VII of the Civil Rights Act of 1964 encompasses sexual orientation discrimination and gender identity discrimination. On July 28, 2020, the CFPB issued a Request for Information (RFI) to solicit public comments and information to identify opportunities to prevent credit discrimination and encourage responsible innovation under ECOA and Regulation B. Among the questions posed, the CFPB asked whether the Bostock decision should affect how the CFPB interprets ECOA.

The CFPB's interpretive rule is consistent with the Supreme Court's Bostock Decision.

"This is a defining moment for the LGBTQ+ community," said National Association of Mortgage Brokers president Kimber White, in response to the CFPB's interpretive rule. "As a gay mortgage professional myself and one who has tirelessly championed equality in lending, I applaud the CFPB on this ruling. The dream of homeownership should not be limited by an individual’s sexual orientation or gender identity."

Click here to read more on the CFPB's interpretive rule.