Moms Losing Mortgages: The Government Investigates

[Donnachaidh]

http://www.aclu-wa.org/blog/moms-losing-mortgages-government-investigates

A Washington State woman was featured in a recent news story that has triggered important government investigations into discrimination against pregnant women.

Federal law prohibits mortgage lenders from discriminating against borrowers based on pregnancy, as long as the borrowers can demonstrate that they intend to return to work and will be able to continue meeting the income requirements for the loan. And, although lenders may ask about borrowers’ incomes to determine loan eligibility, they may not use pregnancy or maternity leave as grounds to deny mortgages.

Last month, the Department of Housing and Urban Development (HUD) launched multiple investigations into lending practices alleged to discriminate against pregnant women. HUD’s investigations were sparked by a New York Times article that told the story of Dr. Elizabeth Budde, a resident of Kenmore, Washington. Dr. Budde initially had her mortgage loan revoked after a loan officer learned that she was on maternity leave. A mortgage company president was quoted as saying: “Maternity leave or any other leave of absence often prevents a person from obtaining a mortgage.”

The Times article described lending practices that result in discrimination against pregnant women. Here’s how:

(1) Although lenders may not ask borrowers if they are pregnant, lenders may ask whether they expect their employment or income situation to change.

(2) Certain lenders require borrowers to prove – in addition to having enough income to pay for the loan on closing day – that their income is likely to continue for three years.

(3) Because short-term disability payments will not continue for three years, lenders do not count them as qualifying income and require borrowers receiving such payments to reapply for the mortgage once they return to work.


More at the link ---

[Lance_Boyle]

1. I doubt you'd qualify if you told them you were taking several years off to meditate, either.

Lenders need to determine that a borrower will be able to make payments as contracted. If a borrower outright tells them "I have this much and I'm putting this much down but then I'm not planning to earn any more for a period of several years" the lender can make a judgment based on current net worth. If that's not enough to convince the lender of borrower's ability to pay, lender will not lend. Don't see why this needs to be any different for pregnancy and child-rearing than for other periods of non-earning.

[rox63]

2. Many pregnant women return to work after a couple months of maternity leave

Why should they be penalized for reproducing?

[Lance_Boyle]

3. They shouldn't be, and wouldn't be in terms of the above discussion.

I doubt that any lender would see 3 months with reduced income as a significant liability in terms of judging creditworthiness. And for that matter, parental leave is largely PAID leave up to a certain extent, so there should be no diminished income at all for a 3-4-6 month stretch of leave.

It's when people take off years at a stretch that problems arise. And when people do take off years at a stretch, they have no business returning to work and demanding to be treated as if they'd been there pulling their weight like everyone else all along.