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Landmark same-sex marriage decision could boost mortgage demand

June's landmark U.S. Supreme Court decision that made same-sex marriage legal nationwide could raise demand for home mortgages as gay and lesbian couples gain confidence in their property rights, advocates say.

Couples will no longer face grey areas when buying a home in states where their marriages were not recognized, and should find it easier to place their partners on a title, or add a spouse to a Veterans Affairs (VA) loan.

Advocates also say the decision could indirectly help gays and lesbians by formalizing their status as married in every state, eliminating special categories that may lead to discrimination in the housing and mortgage markets.

The court ruled that states must license same-sex marriages and also recognize those performed in other states.

“It will add more market confidence for the LGBT [lesbian, gay, bisexual, transgender] consumer,” said Jeff Berger, president of the National Association of Gay & Lesbian Real Estate Professionals (NAGLREP).

“Some people were on the sidelines and a little down on the fact that they couldn’t get married: ‘Oh well, we’ll never get a first-loan mortgage.’ Those doubts are out the window. The amount of confidence going forward is great.”

In April, NAGLREP and Better Homes and Gardens Real Estate conducted an online survey of LGBT consumers. Some 81 percent of the 1,798 respondents said they would feel more fiscally protected and confident if the Supreme Court legalized same-sex marriage. Notably, some 73 percent also worried about facing discrimination when buying a home.

Berger said those results suggest that the ruling could boost buyer demand in the LGBT community.

“There has been discrimination,” Berger said. “I do think that this will put [up] an umbrella [so that] corporations and all their affiliates make sure to have on their radar inclusive training, how to treat LGBT couples now that they have the right to marry. I don’t know if it was being done before.”

One noticeable change will come to the VA loan program, which requires proof of a valid marriage for a spouse to be included as co-borrower on a loan. The VA was not allowing same-sex partners of veterans on the loans where the marriages weren’t recognized.

“VA now may recognize the same-sex marriage of all veterans,” VA spokesman Terry Jemison said. “We are now working quickly to bring our practices into conformance with the new Supreme Court ruling.”

Equal treatment, equal hurdles

Although gays and lesbians can freely marry in any state, the couples will not necessarily find it easier to obtain a mortgage, said Jeremy Schachter, branch manager, Pinnacle Capital Mortgage in Phoenix. Schachter, who is gay, says he originates many loans in the LGBT community.

“If two partners are together, we still look at them as a whole, with credit, with income, with debt-to-income, all those items,” Schachter said. “So being married really wouldn’t make it easier.”

Some same-sex couples may actually find it more challenging to get a loan because certain loan programs require underwriters to examine the married spouse’s credit and debts.  Underwriters didn’t have to look at the credit of an unmarried same-sex domestic partner, so long as the person didn’t co-sign on the loan.

“If somebody does get married, they have to follow the same rules as a heterosexual couple, where you have to pull the credit of the non-borrowing spouse,” he said.

The Supreme Court ruling should, however, change attitudes even among the most conservative loan officers, Schachter said.

“Whether they are anti-gay marriage or for-gay marriage, you can’t discriminate against this anymore,” he  said. “That will be a wake-up call for originators who may have never done a loan for a gay couple before.”


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