State Laws

There are many state laws that may have stricter requirements than those in place with the federal rules. Some states prohibit discrimination based on factors like:

  • Sexual orientation or gender identity
  • Ancestral group
  • Political affiliation
  • Military status
  • Geographic location of property

Although each state law is not covered in this training, it is still the responsibility of each lender to have strict policies and procedures in place for following state laws for states in which they are licensed.



In 2011, HUD issued new guidance that treats discrimination based on gender nonconformity or sex stereotyping as sex discrimination under the Fair Housing Act, and instructs HUD staff to inform individuals filing complaints about state and local agencies that have lesbian, gay, bisexual or transgendered (LGBT) inclusive nondiscrimination laws.

HUD also prohibits lenders from using sexual orientation (actual or perceived) or gender identity as a basis to determine a borrower’s eligibility for FHA-insured mortgage financing. The CFPB has said informally that it believes discrimination based on sexual orientation would be sex discrimination under ECOA.


Case Study

Equal Financing to Lesbian Couple

HUD reached an agreement in January 2013 with Bank of America (BofA) to settle a claim that BofA refused to provide financing to a lesbian couple. The agreement was the first enforcement action taken against a lender involving HUD’s rule ensuring that the Department’s core housing programs be open to all eligible persons, regardless of sexual orientation, gender identity or marital status.

The claim was that BofA denied a loan to a Florida couple seeking to obtain an FHA-insured mortgage because of their sexual orientation and marital status. Through the application and approval process, BofA found that one of the applicants was not employed. The applicant enlisted her partner’s mother as a co-applicant on the loan. BofA assured the couple for weeks that they were likely to receive the loan; however, one business day prior to closing, BofA denied the loan because it did not consider the loan applicant and the co-applicant directly related because the applicant and her partner were not married. As a result of BofA’s actions, the couple was not able to close on the loan.

Under the terms of the agreement, BofA agreed to pay HUD $7,500 and to notify its residential mortgage loan originators, processors and underwriters of its Settlement Agreement with HUD.

In addition to these federal actions, several states and localities provide protections for LGBT individuals. You must follow and adhere to all state and local laws and regulations as they relate to fair lending practices.