Reaching out to gay, lesbian, bisexual and transgender communities could present future growth opportunities for credit unions, according to the Filene Research Institute.
A new Filene report, "Understanding the LGBT Opportunity in Financial Services," presented a case rooted in the financial reality that many people in these communities experience but few outsiders realize.
The report pointed out that, contrary to popular mythology, most gay men are not wealthy and many same-sex couples experience higher rates of poverty than heterosexual couples do.
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The report's findings included that same-sex households are less likely than heterosexual households to own property and hold mortgages; many gays and lesbians still face credit discrimination, and a majority of gays and lesbians reported fear of being denied a mortgage for sexual orientation rather than for financial reasons.
"For the credit union system, the LGBT community is a potential growth opportunity," Filene Chief Knowledge Officer George Hofheimer said. "Very few financial institutions target this market beyond the occasional marketing message."
Hofheimer authored the report along with Madison College Political Science Instructor Matthew Lieber.
"A higher incidence of poverty shows the economic challenge facing LGBT persons overall, as well as certain differentiated impacts within the LGBT population," Hofheimer added. "Gay men are 25% more vulnerable to living in poverty than heterosexual persons, according to multiple surveys (Badgett, Durso, and Schneebaum 2013, 1); 20.7% of single LGBT persons live on incomes under $12,000 (CAP and MAP 2014, 4). Put differently, the LGBT population is like America, in which economic marginalization is widespread, but even more so."
Hofheimer and Lieber cited data that found 29 states still permit lenders to consider sexual orientation as a credit risk, and pointed to a 2013 case in Florida, in which a lesbian couple was forced to sue Bank of America in order to obtain a mortgage for which they were otherwise financially qualified.
"The case drew scrutiny only because of a special protection covering one segment of mortgage financing," the report noted. "In 2012, the U.S. Department of Housing and Urban Development required that HUD-funded programs remain free from discrimination by orientation, gender or marital status. Federal rules, while important, have an incomplete impact. Many lending situations are subject to state regulations."
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