Mortgage lenders are not homophobic

Mortgage lenders are not homophobic

Journalists tend to be gullible or sensationalistic in reporting on allegations of bias or discrimination against minorities. They believe such allegations, or imply that they are likely true, even when evidence contradicts them or calls them in question.

For example, long after it was obvious to lawyers that the Duke Lacrosse case involved a hoax rather than an actual crime, many journalists, such as New York Times reporter Duff Wilson, kept believing in it. They peddled the Duke Lacrosse rape hoax, even after it was debunked. The defendants in the Duke lacrosse case, charged with an interracial rape, were vindicated by DNA evidence and declared innocent by North Carolina’s state attorney general, Roy Cooper. But the Times’ Wilson falsely claimed there was a considerable “body of evidence” against the accused students. Amanda Marcotte, a writer for Slate, the Guardian, and other leading progressive publications, defended the hoax and the baseless prosecution even after ethics charges were brought against the prosecutor. She wrote that “people who defended the wrongly accused Duke students were ‘rape-loving scum.’” She complained about the charges being “thrown out,” sarcastically asking, “Can’t a few white boys sexually assault a black woman anymore without people getting all wound up about it?”

Now, some journalists are peddling the false notion that mortgage lenders are homophobic and charge gay couples higher interest rates because they are gay. But as a gay legal scholar at the Cato Institute notes, this claim is not supported by the data in the very study that is cited:

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A study by Iowa State researchers that has gotten some media attention at places like NBC News finds that mortgage lending to same-sex applicant pairs is associated with higher rates of loan rejection and slightly higher interest rates. The study is already being cited in support of the Equality Act, a bill that, among many other provisions expanding the scope of federal law, would extend the federal Fair Housing Act to cover sexual orientation.

There are reasons, however, to approach the findings with caution. To begin with, lenders currently have an economic incentive to underwrite loans correctly and compete for all profitable business. Beyond that, studies that find positive (even if thin) evidence of discrimination tend to get reported and amplified heavily, while those with null results get ignored.

The first point to get on the table here is that same-sex couples are decidedly *not* distributed randomly across all sorts of neighborhoods. In particular, in common observation, male couples have long tended to be overrepresented in neighborhoods that are undergoing various stages of renovation…Some of these neighborhoods are run-down or even crime-ridden when the same-sex couples start moving in.

Charging a higher interest rate to people based on the neighborhood they live in (and how risky it is) is not discrimination based on sexual orientation, even if those neighborhoods happen to contain a somewhat larger percentage of gay people. That is all that happened. As the Cato Institute’s Walter Olson notes, the write-up of the study at Iowa State supports the conclusion that lenders were charging different rates based on location, not based on whether an applicant was gay or heterosexual: “In neighborhoods with more same-sex couples, both same-sex and different-sex borrowers seem to experience more unfavorable lending outcomes overall.”

Gay couples disproportionately live in neighborhoods that have higher-than-average shares of riskier loans, such as “hybrid construction” loans that involve the risks and “complications of renovation.” It is perfectly reasonable to charge a higher interest rate for a loan that is riskier. Renovations can go awry and increase the risk of the loan not being repaid in full. Also, interest rates are based partly on the loan-to-collateral ratio, and this ratio will be higher for a run-down home being renovated.

Gay couples also live disproportionately in neighborhoods where it is harder for lenders to foreclose on a home, and takes longer to do so. The harder it is for a lender to foreclose on homes and get some of its money back, the more interest it will have to charge on its mortgages to break even. States vary widely in how long it takes to foreclose on a mortgage, and states that make it take a long time tend to have higher mortgage interest rates as a result.

Many journalists have gotten the basic facts of discrimination lawsuits wrong in the past.

One example is the media’s inaccurate reporting on the Supreme Court’s ruling in Ledbetter v. Goodyear (2007). In that decision, the Supreme Court ruled that a woman who had waited more than five years after learning of pay disparities to file an EEOC complaint, and more than a decade after her pay was allegedly set lower than her male peers, could not sue for discrimination under a civil-rights law known as Title VII, because that law has a short 180-deadline (unlike another law that she could have pressed her claim under, the Equal Pay Act, which has a longer deadline).

In its ruling, the Court held that workers suing under Title VII generally must sue within 180 days after a discriminatory pay level is set, and that it is not enough that a worker sued within 180 days after a subsequent paycheck or pension benefit affected by the discrimination, which could be many, many years later. The court specifically left open, however, the possibility that a worker could sue more than 180 days after the discriminatory pay decision if the worker did not discover that the decision was discriminatory until much later. In footnote 10 of its decision, it wrote, “We have previously declined to address whether Title VII suits are amenable to a discovery rule. … Because Ledbetter does not argue that such a rule would change the outcome in her case, we have no occasion to address this issue.”

Despite that fact, however, New York Times reporter Linda Greenhouse falsely reported that the 180-day deadline “applies, according to the decision, even if the effects of the initial discriminatory act were not immediately apparent to the worker.”

Although the plaintiff, Lilly Ledbetter, had admitted in her deposition that she had been informed by 1992 of the pay disparity she later sued over and had cited it herself to her boss by 1995, Greenhouse also falsely claimed that the Supreme Court rejected Ledbetter’s claim because “she learned of her fate” at the end of her career, “too late, according to the Supreme Court’s majority.”

Despite the fact that the Supreme Court had explicitly left open the possibility that Ledbetter could have sued if she hadn’t known about the discrimination against her, other New York Times reporters, relying on Greenhouse, stated just the contrary. For example, Sheryl Gay Stolberg similarly stated that Ledbetter discovered only “when she was nearing retirement that her male colleagues were earning much more than she was.”

Other papers, such as the Los Angeles Times, made more extreme, and obviously false, claims about the decision. The Los Angeles Times falsely claimed that under the Ledbetter ruling, “any employer that could hide discrimination for six months could get away with it.”

But that was false, as the liberal employment lawyer David Copus, who brought landmark pay discrimination lawsuits for the EEOC against Sears and other major employers, noted. As Copus observed, Ledbetter had suspected for years that she was discriminated against, and the Supreme Court left intact employees’ ability to sue when employer deception leaves workers unaware of discrimination against them. See David A. Copus, “Pay Discrimination Claims After Ledbetter,” Defense Counsel Journal, Volume 75, page 300 (Oct. 1, 2008).

As Copus noted:

Ledbetter admitted at her deposition that ‘different people that [she] worked for along the way had always told [her] that [her] pay was extremely low.’ She recalled that her manager told her in 1992 that her pay was lower than that of other Area Managers, and that by 1994 or 1995, she had learned the amount of the difference. In 1995, Ledbetter told her supervisor that she ‘needed to earn an increase in pay’ because she ‘wanted to get in line with where [her] peers were, because … at that time [she] knew definitely that they were all making a thousand [dollars] at least more per month.’

Yet she waited to sue until shortly before she retired, and after the supervisor she accused of discrimination died. As legal commentator Stuart Taylor observed in the National Journal, “Ledbetter waited more than five years after learning that she was paid substantially less than most male co-workers to file her Title VII claim.” See Stuart Taylor, “Does the Ledbetter Law Benefit Workers, or Lawyers? Democrats and the Media Have Distorted the Facts Underlying the New Equal Pay Law,” National Journal, Jan. 31, 2009.

Given Ledbetter’s tardiness and longstanding knowledge that she might have been discriminated against, her lawyer didn’t even claim that she could take advantage of the Supreme Court’s exceptions to the deadlines for workers whose employers conceal evidence of discrimination, leaving them unaware of discrimination, such as “equitable tolling” and “estoppel.” (See Zipes v. Trans World Airlines, 455 U.S. 385, 393 (1982) (“filing a timely charge of discrimination with the EEOC is … a requirement that, like a statute of limitations, is subject to waiver, estoppel, and equitable tolling”)).

In January 2009, I sent an email to the New York Times questioning its inaccurate reporting, and describing how it conflicted with Ledbetter’s own deposition, and the writings by legal commentators like David Copus and Stuart Taylor. In response, I received an email from senior editor Greg Brock, claiming that the New York Times’s reporting couldn’t possibly be wrong. Why? Because so many other newspapers had made the same claims the New York Times did, and because its reporting was consistent with the claims Ms. Ledbetter made (never mind that those self-serving claims were inconsistent with plaintiff Ledbetter’s own admissions in her deposition, and inconsistent with what the Supreme Court said in its decision!). Apparently, the pervasiveness of a media error makes it unchallengeable.

In his January 30, 2009 email, Brock wrote:

I do not know where Mr. Taylor came by his information. But if you do your research, you will see that dozens of news organizations have consistently reported the following background on the Ledbetter case: Lilly Ledbetter worked for Goodyear for 19 years before accepting an early retirement offer in 1998. Shortly before she left Goodyear, Ledbetter received an anonymous memo revealing that the other shift supervisors with the same title and the job responsibilities she had, were paid between 14-30% more than she was earning…Until Ledbetter got this memo, she did not know she had been shortchanged all those years…[A similar] statement was also presented by Ms. Ledbetter in testimony before Congress…So this shows that she did indeed learn the story not long before her retirement.

Years later, the Washington Post’s fact-checker, Glenn Kessler, would call into question the credibility of this media narrative about the Ledbetter case. But his fact-check occurred too late, after this false narrative was firmly fixed in the public mind, thanks to people like Greg Brock.

Press coverage suggesting that the Ledbetter decision created a rigid 180-day deadline for pay discrimination claims was also false because it ignored the fact that the 180-day deadline only applies to plaintiffs who choose to sue only under the law with the shortest deadline, Title VII. Pay discrimination claims can also be brought under the Equal Pay Act, which has a longer three-year deadline for most claims. Unlike Title VII, the Equal Pay Act’s deadline has generally been interpreted as starting anew with each discriminatory paycheck, giving workers ample time to sue even when they take years to discover that they are being paid less.

In its Ledbetter decision, the Supreme Court specifically noted that the plaintiff could have sued instead under the Equal Pay Act, observing that plaintiff “having abandoned her claim under the Equal Pay Act, asks us to deviate from our prior decisions in order to permit her to assert her claim under Title VII.” Plaintiff Ledbetter’s lawyer admitted to the court that he had goofed by failing to press her claim under that law. In short, it wasn’t the Supreme Court that prevented Ledbetter from obtaining compensation for pay discrimination: it was her own lawyer, and her own tardiness in suing after she learned of the pay disparities she claimed were discriminatory.

Hans Bader

Hans Bader

Hans Bader practices law in Washington, D.C. After studying economics and history at the University of Virginia and law at Harvard, he practiced civil-rights, international-trade, and constitutional law. He also once worked in the Education Department. Hans writes for and has appeared on C-SPAN’s “Washington Journal.” Contact him at


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