Loan Modification

HUD Launches Site for LGBT Study Comments

By Peter G. Miller

I can well remember when housing discrimination was a fact of life. Appraisal rules actually encouraged discrimination — including the appraisal rules used to create FHA mortgages.

To understand how the system worked allow me to borrow a bit of history from my personal blog, OurBroker.com:

>>>For example, it wasn?t until 1977, according to The Washington Post, that basic appraisal textbooks were updated to say ?it was once common practice to examine the racial, religious or ethnic composition of a neighborhood in an effort to detect any sign of nonconformity or change. Such an approach is now regarded as misdirected and the use of factors relating to the racial, religious or ethnic composition of a neighborhood in arriving at a conclusion of value is now deemed an unreliable practice.? (See: Appraisers Institute Settles Suit, Nov. 19, 1977)

>>>In 1980, the appraisal industry finally agreed to a policy which said that ?the value attributed to the property is not dependent upon the homogeneity of racial, religious or ethnic characteristics of the neighborhood?and the lack of such homogeneity in a neighborhood does not cause a diminution of value.? (See: Agreement Set In Rights Case Against Lenders, The Washington Post, Jan. 26, 1980)

Circular Logic

In other words, the very fact that a neighborhood or community included different types of people was by itself reason enough to reduce property values, “proof” some would claim that home values really did go down whenever “they” (whoever “they” were) moved into the area. Of course, if you got rid of a biased and irrational rule then property values would no longer be reduced….

Now HUD is asking the public to “comment on the design of an unprecedented national study that will examine housing discrimination based on sexual orientation and gender identity. While there have been no national assessments of housing discrimination targeting the lesbian, gay, bi-sexual and transgender (LGBT) community, there is a body of evidence suggesting this sort of bias exists.”

Essentially, HUD is preparing the groundwork to expand anti-discrimination rules that will impact FHA loan guidelines as well as underwriting standards in general.

“It is critical that as we embark on this historic discrimination study, that we hear from those who may have been denied housing based on their sexual orientation or gender identity,” said Dr. Raphael Bostic, HUD’s Assistant Secretary for Policy Development and Research. “The comments we received in our town hall meetings, and those we will gather from this new website, will help inform how we might test for housing discrimination in the sale or rental of housing based on LBGT status.”

“HUD’s new LGBT website,” says the government, “will seek suggestions on how best to execute the study. For example, how would a ?tester’ signal in a conversation with a landlord that an individual or couple was LGBT?”

Now HUD wants to hear from you. What you say could help someone get an FHA mortgage, someone who today might face unspoken barriers. HUD has established an online suggestion box to elicit public comments for how best to undertake their new study. Make your views known, it’s what we do in America.

Full post as published by FHA Mortgage Guide on March 24, 2010 (boomark / email).