LGBTQ+ Homebuyers Need Progressive Mortgage Lenders

More recent surveys, such as one done in October 2022 by Realtor.com in partnership with the LGBTQ+ Real Estate Alliance, suggest that LGBTQ+ buyers face affordability and safety issues while attempting to find their homes. The survey of 1,538 LGBTQ+ members in the U.S. found about 29% reported actual or suspected discrimination during the homebuying process.

Of that same survey pool, 44% of the transgender community said they had experienced or suspected bias. Over half also said that they hoped to buy houses in communities that made them feel safe and accepted. However, in many of these areas — which tend to be urban cities — the cost of living is often unaffordable.

Finding A Niche

For Andrew Dort, these statistics revealed a glaring issue in his industry. Dort is a broker and owner of Pride Lending, a Las Vegas-based lender that markets itself as LGBTQ+-friendly. Dort’s business from the surface level is enthusiastic about serving a community he is also a part of. Pride’s website boasts a rainbow-accented logo of a lion. A certification accompanies the site’s bright colors as an LGBT-owned enterprise by the National LGBT Chamber of Commerce and customer testimonials.

But Dort didn’t wake up one day and decide to start a company based on the principles of pride and safe spaces. He started as a receptionist in his early 20s at All Western, a Denver-based mortgage company, and slowly worked his way into a processing role. He transferred to Colten Mortgage — also in Denver — as a loan processor, eventually becoming a loan officer.

Colten transferred Dort to Las Vegas as a branch manager and in 2020, he decided to start his own company. “I knew I wanted to do my own thing at some point,” Dort said. “I’m a part of the LGBTQ+ community and I know that there’s a shared life experience with others in the community. I figured that some [LGBTQ+] clients would feel comfier making the biggest purchase of their life with someone in their own community.”

Dort saw a need for a niche in the industry after he witnessed others in the community face difficulties working with lenders while trying to buy a home. “I’m luckier than most. I’m a white man and I often can pass for being straight, and for me, I personally had no issues buying a home,” he said. “But when we compare that to my husband, who is non-binary and gender fluid, he probably would have had a harder time buying a home and connecting with a lender if he bought alone.”

Even though Dort pointed out that as a country, there has been a progression in acceptance of sexualities, he still hears shocking stories from his customers about being misgendered or isolated in their homebuying processes.

“I had a call from one customer who had a great rapport going with a loan officer, but the second that the customer mentioned that he was married to a man, the officer’s entire demeanor changed,” Dort said. “It wasn’t the first time I heard a story like that, and it certainly won’t be the last.”

Dort’s also seen appraisal and other biases in LGBTQ+ couples’ homes. “Two men with the same last name presenting an offer on a home may be met with prejudice still,” he said. “I read a story about a couple in Oregon who refinanced their house and the appraiser verbalized during the visit that they didn’t believe in same-sex marriage. The next week they had the appraisal redone and it was $200,000 more than what had been appraised the week before.”

Denise Lanouette, a mortgage consultant at First World Mortgage, knows firsthand what that feels like.  

She says that when she tried to buy her first home with her partner, the loan officer gave the couple two separate applications and didn’t even consider their partnership. “In that case, I chose to step away from working with that LO,” Lanouette explained. 

She says that when she entered the industry, she made it a point to approach conversations using gender-neutral terminology, especially when discussing cosigners. 

For a long time, Lanouette says that she kept her LGBTQ+ identity separate from her work and worried that it would have a negative effect on her business. But last year, Lanouette was challenged by her local Gay and Lesbian Chamber to allow her identity to spill into her work. “It’s allowed me to connect with LGBTQ+ realtors and combine our networks,” she said. “The chamber told me that being public with my identity may cause me to lose a percentage of people, but it could also help me gain. But since I started being more open, my business has grown twofold. It’s actually helped me to establish a greater rapport and trust with my customers. We sometimes forget that this is a relationship business and it’s important to be open especially when discussing difficult conversations like personal finance.”

Lanouette says that her company’s branch is in Enfield, Conn., and that every year, local businesses have the opportunity to put pride flags outside. This is Lanouette’s first year participating. “I truly believe in fair and equal housing, and that goes for everyone,” she said. “There’s still progress to make, but I am proud and ready to put that flag outside.” 

Doing Things Different

Dort says that as soon as a customer walks into Pride Lending, there’s a table full of nametags that ask the customer what their pronouns are. “It’s little details that mean a lot to my customers,” Dort said. “We’re also dealing with legal names here, and maybe for a person that’s transitioning, they may want to be called something different in person as opposed to what’s on a legal document.”

However, Dort says that approaching customers in the LGBTQ+ community shouldn’t be that hard or different from any other customer. “The point is to make their homebuying experience as normal as possible without them having to worry about being judged,” he said. “You treat every customer equally. There aren’t many spaces outside of queer spaces that take into account that not every couple is straight or that someone’s legal name isn’t their preferred name.”

Of course, Pride Lending can’t offer any specialty services or programs for LGBTQ+ homebuyers. But, Dort says that they go the extra mile to create a space of inclusivity. “We’re more or less advertising a queer space,” he explained. “We also advertise and sponsor queer events and give back to the queer community. We have a presence at Pride Fest. We make it known that it’s not about any special products for the LGBTQ+ community, but educating them about products that they could take advantage of. We, of course, work with everyone.”

Dort says that there aren’t necessarily any products or programs that he doesn’t also offer to his heterosexual customers. “I really try to push down payment grant programs and even co-owning programs for younger customers to curb the affordability crisis,” he said. “I’ve pushed this for groups of queer people to buy with their friends to get out of the rental market, and they can really share the advantages of homeownership together.”

Gary Boyer, who runs Mortgage Monkey — a DBA of Directors Mortgage — got his start serving the LGBTQ+ community in 1999. Previously, Boyer went to college thinking that he would pursue a job in human resources. Following graduation, he worked for a recruitment company for loan officers and realized how minimal the outreach was for LGBTQ+ buyers and borrowers. “I saw that a lot of people were overwhelmed by the homebuying process, and it became a passion of mine to incorporate some fun and inclusivity into the process,” he said. “There’s a quote on my website that says ‘Years ago I chose to specialize with the Gay, Lesbian, Bi, and Transgender Community.’ I’m extremely proud that many of my clients are Gay/Lesbian — but I don’t discriminate, I’m happy to work with straight clients too! One of my proudest accomplishments is having people from ALL walks of life come and see me because they know I don’t discriminate.”

Boyer says that as a lender specializing in marketing to the LGBTQ+ community, he stresses the importance of recognizing that many programs are designed for nuclear families.

“I think that when working with an underserved community, it’s important to help them explore options that best fit their needs. But it also involves approaching them with understanding,” he said. “It also involves helping them be educated about extra steps that they can take to protect themselves in their homebuying process.”

The Need for Inclusivity

Dort also recognizes that the mortgage industry is “a white male, cis-gendered industry” that doesn’t represent the true diversity of a typical customer base. “The point of Pride Lending is that we look like and represent what our customers identify as,” Dort explained.

Even though Pride Lending is based in one of the most flamboyant cities in the United States, Dort describes Nevada as a “purple” state, meaning that while the state has some progressive laws to protect LGBTQ+ people, some of the state’s politics lean right. “A plus is that Nevada has more protections for LGBTQ+ people than other states do,” he said. “While they’re not as progressive as California or Colorado, I have found in my personal experience that Vegas is relatively accepting.”

Dort himself is licensed in not just Nevada. He also services Colorado and Tennessee. He says that the goal is to expand Pride’s licensing into Florida, Oklahoma, Kansas, Utah, Alabama, California, and Georgia, among others. “These are states that we’re seeing a need in,” he explained. “While California is a pretty accepting state overall, there are still some areas where it’s not so accepting. The rest of the states have some regressive stances on laws that we [as a company] are concerned about.”

Dort knows this firsthand. He was born in Arkansas and went to middle and high school in Kansas. “There’s good and bad in every state. For me, at that time in my life when I wasn’t out yet, Kansas was incredibly Catholic. It wasn’t until I moved away that I was able to accept myself and come out and see other lifestyles,” he said.

Beyond the Mortgage

Not all is fun or straightforward when it comes to advocating for LGBTQ+ clients. Boyer says that oftentimes, loan officers aren’t taking into account the complexities of the legal system when working with clients in the LGBTQ+ community. “One of the areas that I specialize in is title elements,” Boyer said. “If there was ever a judgment that overturned same-sex marriage, those who took titles subject to being married could have that title invalidated and their ties to a property invalidated.”

Boyer says that title is more than surface level. He explained that when couples aren’t legally married, each person is a separate, legal entity and if anything were to happen to one of the persons, the inheritance would go automatically to blood family members as legal “next of kin.” “That’s obviously not what a lot of people intend when they buy a house with a partner and loved one,” he said. “Oftentimes this happens to same-sex couples. I usually recommend clients take title as ‘Not as Tenants in Common, but with Rights of Survivorship’ since it is not something that can be challenged by other legal next of kin.”

Boyer says that death and money often bring out the worst in people, which is especially important to keep in mind when a same-sex couple is buying a home. “For a lot of people, I don’t think it can be understated how much of an emotional process [buying a home] is, especially if the relationship isn’t recognized,” Boyer said. “And that alone discourages many from becoming homeowners.”

The Struggles Of LBGTQ+ Borrowers

There are plenty of well-documented evidence and studies that look into lending discrimination against minorities, but researchers have only just begun investigating lending and housing discrimination against the LGBTQ+ community.

Watch it on The Interest: LGBTQ+ Lending

Here are some highlights:

• There are currently 10.7 million American citizens who identify as LGBTQ+, all of whom are impacted by the homeownership gap, higher rates and fees on their loans, and an increased risk of homelessness.
• Evidence from a UCLA Williams Institute report indicates that LGBT adults are less likely to own homes and more likely to rent than non-LGBT adults.
• According to representative data from 35 states, nearly half (49.8%) of LGBT adults own their homes, compared to 70.1% of non-LGBT adults.
• Homeownership is particularly low among transgender people. In 2019, the first nationally representative sample of transgender adults found that only a quarter (25%) are homeowners, compared to 58% of cisgender adults.
• Additionally, in The American Community Survey (ACS) that took place between 2015 and 2017, among those who owned their homes, same-sex couples were more likely than different-sex couples to be carrying a mortgage (77% vs. 68.2%, respectively).
• According to 2019 HMDA data, same-sex borrowers experienced a 3% to 8% lower approval rate compared to different-sex borrowers of the same profile.
• Among the loans approved, same-sex borrowers were charged higher interest and/or fees, yet there is no evidence to suggest that same-sex borrowers are riskier borrowers than comparable different-sex borrowers. Both sets had similar risk of default and the same-sex borrowers had lower prepayment risk.
• In another study by HUD, researchers tested landlords’ response to gay couple or straight couple rental inquiries. Different-sex couples were favored over male same-sex couples in 15.9% of field tests and favored over female same-sex couples in 15.6% of tests.

> Compiled by Staff Writer Katie Jensen

Realtor.com finds LGBTQ+ Buyers Spend More Of Their Income To Own A Home

Data shows that LGBTQ+ buyers more likely to put smaller down payments on a home

According to new survey data from Realtor.com, recent LGBTQ+ and BIPOC (Black, Indigenous, and people of color) buyers are going into homeownership weighed down and more burdened by housing costs than white and non-LGBTQ+ individuals.

Lower down payment, higher sales price, and loan denials creates a cost crunch for communities challenged by lower incomes

Realtor.com’s data shows that LGBTQ+ and BIPOC buyers are more likely to put smaller down payments on a home, with nearly two-thirds (65%) putting down 20% or less of a home’s purchase price when buying compared to about half (53%) of white, non-LGBTQ+ buyers. LGBTQ+ and BIPOC buyers were also nearly 9% more likely to pay over a home’s asking price to get their offer accepted — 86% paid over asking compared to 79% of white and non-LGBTQ+ individuals.

A smaller down payment on top of an above-asking home price generally equates to a higher interest rate and monthly mortgage payment, and that means LGBTQ+ and BIPOC buyers are likely to pay a larger share of their income toward housing than other buyers. That’s especially challenging for budgets, as a higher percentage of LGBTQ+ and BIPOC homebuyers were also more likely to fall into lower income groups than white and non-LGBTQ+ buyers.

Realtor.com also found that LGBTQ+ and BIPOC buyers face challenges during the mortgage process, and are 1.7 times more likely to have been denied mortgages two or more times.

“More Americans than ever before are stretched thin because of the growing housing cost burden, but our data shows that LGBTQ+ and BIPOC buyers are potentially spending even more of their income to own a home of their own, which can make it difficult to afford other essentials like food and transportation and creates even greater inequalities,” said Laura Eddy, Realtor.com vice president, research and insights.

“With the rising costs of homeownership taking a greater toll on budgets, resources like down payment assistance can help reduce the overall financial burden of buying a home and make it more accessible to a wider range of individuals,” she added.

> By Staff Report, National Mortgage Professional News

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