Identity documents can cause a myriad of problems for trans and gender non-conforming individuals trying to access financial services.
Requirements that identity documents must be obtained and referenced as part of the credit application process can result in discrimination against people based on gender identity or expression. Only an estimated 67 percent of transgender people have been able to update at least one identity document and one-third have no identity documentation consistent with their gender identity. (Source)
Why is this the case?
In the US, the lengthy and expensive undertaking of getting your name and gender marker updated on your IDs (which varies from state to state) can often cause trans people people to avoid or put off the process. Even after getting your updated documents, that’s not the end; you’ve then got to update all of your financial accounts, which can vary from faxing the court order (seriously, who faxes anymore?) to appearing in person at your bank or credit union.
Similarly, if you’re gender non-conforming, it can be an emotional or unpleasant experience dealing with financial advisors who might not know any better than to gender you on the basis of your identity documents.
The process of updating documents and accounts also isn’t wholesale, meaning you can end up with a partial or missing credit history, making you vulnerable to rejection for financial services in addition to discrimination.
It can often feel like gambling; while a lot of banks might pay lip service to the LGBT community during pride month, how many of them are actually training their staff to account for people in our community? If it’s down to the individual employee to decide if you’re approved or rejected, how can you know that you’ll receive the same experience from employee to employee?
A banking experience built for your needs
At Daylight, all of our services are designed for the specific needs of the LGBT+ community. We understand your unique needs, so you can rest easy knowing that you’re being given the best advice and financial options available.
Having a family is a basic human right, and has been a massive topic in the LGBTQ+ community for many decades. I don’t want to go into why it is not unhealthy to raise a child as an LGBTQ+ couple, and why love is the only important aspect needed for the healthy development of a child; no matter the sexual orientation of the parents. I recommend watching the documentary series ‘Babies’ on Netflix, if you want to learn more about the research done on this topic.
Today, I want to give a quick look into the financial struggles couples who want to start a family, especially a gay couple, might face.
Let’s start with options we currently have as LGBTQ+ couples:
Adoption or fostering
If we put aside the options that are not naturally possible for gay couples, and where there is a lack of legal certainty, we are left with surrogacy. But for many couples, this option is often unattainable given their financial situation. Why is that?
How much does surrogacy cost and where does the money go?
The price of an end-to-end surrogacy process may vary based on multiple factors, such as the agency you choose or your location. In general, the price varies between USD$90k-130k. As an example, the price list from West Coast Surrogacy, details what you pay for:
Gestational Surrogate Compensation (Base pay for an experienced surrogate in California; Caesarean section; surrogate insurance; unexpected situations as a cancellation; termination of pregnancy, etc)
Screening Costs (Psychological screening; criminal investigation; medical screening)
Legal fees (Contracts; establishing parentage)
Other (Medication for the surrogate; monitoring of the pregnancy; life insurance, etc)
The process is complicated, difficult and all the risks need to be covered by agencies, which is reflected in the high price tag. Is it then possible, even for an average (those outside the top 10-20% earners) couple, to go through the process?
How to pay for the process
Loans – home equity loans; loans from a retirement account; fertility financing loans; agency financing programs
Fundraising or crowdfunding are very popular ways of financing personal and community projects. The process is very simple compared to other financial products, but results are very unpredictable and it may take a long time to get the money. The benefits however, are that you don’t have to return the money, you don’t pay interest and you only pay a small share to the platform of your choice.
Grants are a great opportunity for everyone who really can not afford to repay a loan or do not have enough capacity or skill to set up a fundraising campaign. Grants don’t have to be repaid in most cases. The process varies depending on the grant provider. You should do your research and check what is available. For example, Men Having Babies provides assistance, and there are other similar options. Remember, that the grants are usually sponsored by companies and families. So if you have any financial resources spare, you can support other parents.
Loans may be difficult to access and difficult to repay. This is especially true when you realize that not only will you have to pay for the loan and its interest, but you also have baby-related expenses and at least one of the parents won’t be working full time for some time. On the other hand, loans represent the highest chance of getting the needed funding.
In our previous post about the difficulties of gay couples applying for a loan or mortgage, we went through data that shows how couples are still discriminated by banks. You will want to choose the right financial partner – a bank that trusts you and supports you on the way. In the end, you want to enjoy the time with your family and your newborn and not struggle in discussions with old school banks.
Who is the right partner for you?
We are building a bank that listens to the needs of the LGBTQ+ community. One of the difficulties the community has is the funding of surrogacy or different ways to start a family. Indeed, there are many challenges you will face in going through this process, however we at Daylight are here to support you. Join us at be-money.com as we are set to launch in the US soon. If you have already gone through the process and are willing to share your story with us, please send us an email at firstname.lastname@example.org
According to multiple credit and lending laws, such as the Fair Housing Act and other similar regulation and policies, discrimination based on gender, sexuality and sexual orientation should not be an issue of contention in contemporary society. But people who have actually gone through the process of applying for a mortgage or other lending products, say that they are being systematically discriminated against by the banks. If you think we are making this up, let’s review the relevant data at our disposal.
Data from a study conducted by the Movement Advancement Project shows that 73% of the LGBTQ+ community living in the US, live in states where there is no explicit policy that prohibits credit discrimination, based on sexual orientation or gender identity.
This means that financial institutions, such as banks, are not enforced to treat their customers on a truly equal basis by regulators.
Where does this lead?
Researchers from the Iowa State University studied national mortgage data from 1990 to 2015. The patterns they found were surprising – and not in a positive way. The mortgage approval rate for same-sex couples was 3-8% lower compared to heterosexual couples applying for mortgages.
They also studied the correlation between applicants’ socio-economic backgrounds, such as work history and creditworthiness. Similarly, same-sex couples were 73%more likely to be denied than heterosexual couples with the same background.
“The difference in finance fees averaged less than 0.5 percent, but when combined, added up to as much as $86 million annually,”
say the co-authors of the study, Hua Sun and Lei Gao.
What opportunities do we have to change the situation?
Of course, we can push for the policies to be enforced by law. We know that there is some action happening. For example, the 2015 Supreme Court of the United States ruling codified the fundamental right for same-sex couples to marry in all 50 states. However, the legal process is often slow and gradual.
It is not an exaggeration to say that within financial institutions, the pace of change is often even more sluggish than in the public sector. Therefore, we should look to take more control of our own volition. We simply cannot afford to wait for the government to take the necessary steps. We need to take action on our own, as a community.
Building our bank, based on equal rules
It is an enormous effort for legacy banks to act on changes to internal processes and product rules, particularly at speed. That’s why we need smaller, more agile and modern banks which can be built based on the needs of specific niche groups. We need an LGBTQ+ bank that is created for and cares for the specific demands of the community, and enables people to live equal lives.
If you feel that the current state of the world needs to change, if you think that action needs to be taken, then join us on the way to building a bank specifically for you. Join us at Daylight.