The Supreme Court ruling in Obergefell v. Hodges found that same-sex couples have a constitutional right to marry nationwide. This will impact residential mortgage lending by requiring lenders to treat same-sex married couples the same as heterosexual couples under federal law. Lenders will need to update their policies and procedures to comply with this ruling by ensuring same-sex couples have equal rights to title property and obtain mortgage loans. The ruling does not change existing CFPB guidance on treating same-sex marriages as valid nationwide.

1. MEMORANDUM
TO: CLIENTS AND FRIENDS
FROM: GREGG & VALBY, PC
DATE: August 12, 2015
RE: OBERGEFELL V. HODGES
How Does the Newly-Recognized Constitutional Right to Same-Sex Marriage Affect
Residential Mortgage Lending?
On June 26, 2015, the Supreme Court of the United States (the “Court”) held in the
landmark case, Obergefell v. Hodges, that the Fourteenth Amendment of the U.S. Constitution
requires a state to (1) license same-sex marriages, and (2) recognize same-sex marriages lawfully
licensed and performed in another state. Pursuant to the Court’s holding, existing state laws that
forbid same-sex marriage violate the Fourteenth Amendment, and are, therefore,
unconstitutional; same-sex couples may “now exercise the fundamental right to marry in all
States […]”.
In light of the historical ruling from the Court, political, philosophical, and ethical debates
are taking place across the country. Regardless of one’s personal view on the issue of same-sex
marriage, however, all lenders must review and adjust their internal processes and procedures to
ensure compliance with the changes triggered by the Court’s ruling.
I. Impact on Existing CFPB Guidance on Same-Sex Marriage
Obergefell v. Hodges will probably not affect the CFPB’s existing guidance on same-sex
marriage issued on June 25, 2014 (“Guidance Memorandum”), after the Court had struck down
certain provisions of the Defense of Marriage Act (“DOMA”) as unconstitutional in United
SCOTT R. VALBY *+
KAREN H. MILLER
THOMAS G. OVERBECK
JODI D. SEALY
JING XIONG (BRAD) LUO#
MICHAEL A. HOHOS
NICHOLAS A. BAILEY
TRAVIS G. BEERWINKLE
GREGORY L. GREGG, RETIRED
*BOARD CERTIFIED IN
RESIDENTIAL REAL
ESTATE LAW BY THE
TEXAS BOARD OF LEGAL
SPECIALIZATION
+MEMBER, COLLEGE OF
THE STATE BAR OF TEXAS
#LICENSED IN NEW YORK

2. States v. Windsor. In the Windsor case, the Court held that Section 3 of DOMA is
unconstitutional under the Due Process Clause of the Fifth Amendment because the federal
interpretation of “marriage” and “spouse” apply only to heterosexual couples. In the same vein,
but pursuant to the Fourteenth Amendment, the Court held state laws banning or refusing to
recognize the legality of same-sex marriages to be unconstitutional. In terms of equal protection
for same-sex marriages/couples, Obergefell v. Hodges complements United States v. Windsor.
When viewed together, the combined effect of Obergefell v. Hodges and United States v.
Windsor is that all laws in the country, federal or state, that treat same-sex marriages/couples
differently than heterosexual marriage/couples are unconstitutional.
In the Guidance Memorandum, Director Richard Cordray declared the CFPB’s policy to
“recognize all marriages valid [including same-sex marriages] at the time of the marriage in the
jurisdiction where the marriage was celebrated.” Further, with respect to federal laws affecting
residential mortgage lending over which the CFPB has jurisdiction, the CFPB would (1) regard a
person legally married in any jurisdiction to be married nationwide, and (2) treat same-sex
marriages/couples the same as heterosexual marriages/couples. For most lenders, the federal
laws relating to the issue of “marriage” include the following:
 Equal Credit Opportunity Act and Regulation B;
 Truth in Lending Act and Regulation Z; and
 Real Estate Settlement Procedures Act and Regulation X.
Since Obergefell v. Hodges does not change the ruling issued by the Court in United States
v. Windsor, we do not anticipate that the CFPB will materially change its policy declared in the
Policy Guidance. Therefore, to comply with federal law under the CFPB’s jurisdiction, lenders
should treat and continue to treat a same-sex couple legally married in one state as married
nationwide.
II. Impact on Lending in States that Currently Ban Same-Sex Marriages
Before the Court’s decision in Obergefell v. Hodges, lenders have had to comply with state
laws that differ from CFPB’s policy on same-sex marriage because the validity of liens against
real property and the ownership of real property rights are governed by state law. In states
(Texas, for example) with laws that banned or otherwise prohibited recognizing same-sex
marriages, same-sex couples could not take title to real property as “husband and wife”, “a
married couple”, or something similar thereto. Consequently, when originating loans to same-
sex couples, lenders could not treat them as legally married for state law purposes. If both
individuals were to take title and be obligated on the loan, the vesting on the security instrument
would show them as “John Doe, a single person, and John Smith, a single person”. If only one
of the couple were the credit applicant and the sole owner of the collateral property, his/her
same-sex spouse would not be required to sign the security instrument for a lender to acquire a
valid lien against the collateral property.
In the wake of Obergefell v. Hodges, lenders should review and revise their policies and
procedures with respect to lending to same-sex couples in states with marriage laws that have
been rendered unconstitutional. In particular, lenders may consider taking action to:

3. 1. Update Written Policies and Procedures.
Written policies and procedures should be updated to reflect that same-sex couples legally
married in any state are entitled to: (1) receive consumer disclosures and loan documents
required under all applicable state and federal law; and (2) take title to real property as married
persons, for example “tenancy by the entity”, if such tenancy is available to heterosexual
couples. In addition, where existing state laws require the signature of both spouses in order to
create a valid lien against any collateral property in connection with a mortgage loan, lenders
should require the signature of both spouses, either heterosexual or homosexual.
Besides same-sex marriages, lenders’ policies and procedures should also address same-
sex divorces. Since Obergefell v. Hodges requires each state to recognize same-sex marriage
legally consummated in another state, it follows that such a same-sex marriage can be legally
terminated in any state as long as the separating couple satisfy other divorce-related requirements
under state laws. For example, in State of Texas v. Angelique Naylor and Sabina Daly, 58 Tex.
Sup. Ct. J. 1216 (June 19, 2015), Angelique and Sabina legally married in Massachusetts in
2004, but sought and received a divorce from a Travis County district court. When the State of
Texas appealed to the Texas Supreme Court to set aside the divorce, the Court held against the
State of Texas, mostly on procedural grounds, and essentially allowed the divorce to stand.
Notably, this Texas case was finalized seven days before Obergefell v. Hodges.
If either one of a same-sex couple were to seek a mortgage loan before a divorce is
finalized in any jurisdiction, the other spouse should be required to sign the necessary loan
documents (e.g., TIL disclosure, security instrument, Notice of Right to Cancel, as applicable)
unless the applicable law provides otherwise regarding the ownership and mortgage of real
property.
2. Collaborate with Settlement Service Providers
Obergefell v. Hodges unifies previously divergent treatment of same-sex couples in terms
of real property ownership and the mortgaging of real property under various state laws. After
Obergefell v. Hodges, same-sex couples and heterosexual couples are treated equally under the
law; therefore, title guaranty companies/ underwriters must follow the law in their title
underwriting decisions. Title companies and agents are likely to fully cooperate with lenders in
treating same-sex couples and heterosexual couples equally in the loan closing process. To
avoid unnecessary delays in closing, however, lenders should consult with title companies
regarding their policies on same-sex marriage at the time of ordering a title commitment.
If you have any questions or comments about this Memorandum, please contact Brad Luo
(713-960-1377; bluo@gregg-valby.com) or Scott R. Valby (713-960-1377; svalby@gregg-
valby.com).
1700 WEST LOOP SOUTH, SUITE 200, HOUSTON, TX 77027
713.960.1377 / FAX 713.960.1809
800.688.1006 / FAX 800.688.1809
www.gregg-valby.com