HUD: Lenders can't deny loans to new mothers

In this era of tightened credit, pregnant women and those on maternity leave have been denied loans, despite a 44-year-old law that prohibits this kind of discrimination.

By Teresa at MSN Real Estate Apr 12, 2012 2:18PM

Keys to a new home on mortgage papers (© SuperStock)One of the life events that often propels people to buy a new home is the arrival of a child.


As anyone who has had a child knows, it's usually necessary to take a maternity leave from work right after the birth.


But being pregnant or on maternity leave does not disqualify a woman from receiving a mortgage, the Department of Housing and Urban Development clarified recently, after reaching an agreement with two lenders accused of denying loans to women who were pregnant or on maternity leave.


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"It is against the law for any lender to deny a mortgage loan to a woman because she is pregnant or on paid maternity leave," John Trasviña, HUD assistant secretary for fair housing and equal opportunity, said in a news release. "Women shouldn’t have to choose between buying or refinancing a home and exercising their right to have a family. HUD will take appropriate action any time we determine that discrimination has occurred."

Magna Bank agreed to pay $14,085 to one woman who said she was asked to return to work before her loan could be approved. Home Loan Center will pay a Las Vegas woman $15,000 after denying her application because she was on maternity leave.


The rules on the rights of pregnant women and those on maternity leave are not new. The Fair Housing Act, which became law in 1968, prohibits housing discrimination based on family status or disability, as well as discrimination because of race, color, national origin or religion. The law applies to home sales, rentals and lending. HUD celebrates April as Fair Housing Month.

As credit has tightened and lenders have gotten more vigilant about verifying information in mortgage applications, some women have complained that lenders are violating the fair-housing law by denying loans to women who are pregnant or haven't returned to work after giving birth.


"If you are not back at work, it's a huge problem," Rick Cason of Integrity Mortgage in Orlando, Fla., said in a 2010 New York Times article that prompted HUD to look at the issue.

In another discrimination settlement with HUD, Cornerstone Mortgage Co. was ordered to pay $15,000 last year for refusing to count a woman's maternity-leave income toward her mortgage, and the company was ordered to set aside $750,000 in case other women made similar claims.


Some lenders argued that Fannie Mae and Freddie Mac don't provide clear guidance on how to treat pregnancy and maternity-leave issues in their underwriting guidelines. But Fannie Mae spokeswoman Amy Bonitatibus told syndicated columnist Kenneth R. Harney last year that Fannie Mae's rules "do not preclude lenders from underwriting mortgages for borrowers receiving short-term disability payments, on short-term leave or expecting to be on short-term leave, including borrowers on maternity leave."


Jan 31, 2014 3:14AM
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Aug 22, 2012 7:39AM
Im afraid that all those single fathers didnt understand the point of this article.
These women were denied loan not because they are women but because their maternity pay is about 60% of their regular pay while on maternity leave ( if they are lucky to have that king of insurance plan) thus their borrowing power was temporarily reduced which lead to declining their loan applications.
So, NO! You as a single father of any number of kids do not get benefits of this kind.

Apr 24, 2012 3:51AM
We are lending money at my company.  I work for a Mortgage bank so if there is anyone out there that is having difficulty getting approved for a loan, give me the opportunity to look at it.  I am working for you and I would love to help anyone that I can. 
Apr 23, 2012 9:12PM
That's right! Americans should learn that NOTHING comes with sacrifice. It's our right to have our cake and eat it too. Facts about earnings and statistics about ability to pay should have NOTHING to do with business decisions. PLEASE would someone let businesses know that bankruptcy is a conspiracy theory as the United State of America will soon prove by showing the world they can spend on every social issue without reserve and remain solvent forever after. All you have to do is have faith, believe in Obama and other liberals and somehow money will appear even though the extra taxes on the rich don't seem to be near enough. FREEDOM from hard choices!
Apr 23, 2012 8:25PM
Okay so many of you I see don't know the law!! The protections are not based on it being a woman but based on family status. So yes if you are male and are on leave for your child which is called the Family Medical Leave Act you would also be protected from being denied for a loan based on this leave. Quit blaming needed protections for your white male problems!!!!
Apr 23, 2012 4:28PM
Only low income single moms who don't work and have 5 kids by 5 baby daddy's get to own houses thanks to Habitat For Humanity!!! Not the hard working family of 6 with a mother and a father who have been together for 15 years and are the biological parents of all 4 kids!
Apr 13, 2012 7:07PM
To clarify, jmsara: It was my first and only child. I worked two jobs for the money, and lucky I did because my husband who IS around was laid off 2 months prior to the birth of our only child.  Still, you should keep making assumptions. It just makes you look desperate, and I kinda like that. :)
Apr 13, 2012 5:18AM
This is discriminating against women at its worst if these pregnant women earn enough money to be able to afford their mortgage payment and they meet all the requirements such as a good credit score and a down payment a woman who is on a paid maternity leave for a few weeks should have no bearing on approving a loan, I guarantee you that if a man was on a temporary leave for a few weeks for whatever reason the banks would not deny the loan lets see if these losers at the banks making these decisions would be able to carry another human being in there stomach for nine months then go through hell to give birth and then be able to go back to work within a short time, more and more women have no choice but to work because of the economy or a divorce or a spouse dying we are suppose to have babies work and take care of our families but cannot apply for loans and be punished for being pregnant this is the circle of life, I had 4 children one has a disability my husband died young from cancer and I raised my children alone and I have a home which I refinanced solely in my name I am paying a big payment  high utility bills and my husband never had medical insurance or life insurance and I managed to pay his hospital bills and this is all after he died and his partner stole all the money from our bussiness and he took the bussiness from me and the courts handed it to him on a silver plater because he was a cop and he knew the judge he took over our business that me and my husband had for over 20 years and I didnt get a penny or even half of my business so I  have first hand knowledge about how women can be taken advantage of.
Apr 13, 2012 5:07AM

a few very smart folks here, like Xina the Awsome, who are doing a very good job of trying to a bunch of "entitlement minded" retards what is really being discussed...likely to no avail.  Blacksheepvet, hell yes that would be the answer to your unrelated question...just because someone is a born with a genetic defect, has arthritis, is a disabled vet (whom everyone should have great respect for - if they were genuinely disabled in active service), or just plain STUPID does not mean they have the AUTOMATIC RIGHT OR ENTITLEMENT for the rest of the society to provide (pay) for them to have a nice house!!  Not any more than a god forsaken 35 year old college educated white male has a RIGHT to have a job better than working at McDonalds!!  Give me, GIve me, GIVE ME!!!  Thats the problem with america now!  Whoa is me...the WORLD owes me.  If you want stuff, get it from your family like Paris Hilton, or get it yourself you don't just DESERVE it because you woke up today!      Smile

Apr 13, 2012 4:50AM
i get tired of women bitching about being a young mother working 2 jobs. Then dont have kids if you cant afford them. Its not our fault its yours.
Apr 13, 2012 4:34AM

I love how they were told to set aside money in case more claims are filed.  As if to say you have enough money to prepare for the storm.  How about sock these idiots with some real penalties. 

Apr 13, 2012 4:27AM

Please People- You're statement is very short sighted. There are as many types of pregant women seeking loans as ther are...well types of women.

I happen to be the primary breadwinner in my household. My income is about twice that of my husband. If we were to buy a house when I was pregnant you bet your tush that I would want them to consider my income in the loan approval process. And that situation is only becoming more common as more men get laid off and new jobs being created are in the service sector traditionally dominated by women.

Frankly I'm appalled by some of the Neaderthal comments I'm seeing on here. A pregnant woman is not necessarily a teen, a single mom, a welfare mom, a serial breeder etc. AND EVEN IF THEY ARE one of those things, she couldn't have become one if one of you men didn't knock her up and leave her high and dry!

You want to "MAN UP" and get some respect for guys? Start by taking care of your women and children.

Apr 13, 2012 4:26AM

I work for a lender. Do you know how many of those women end up not going back to work? They use that  income to qualify then decide not to go back to work. Now we have another foreclosure for someone who bought more house then they could afford

Apr 13, 2012 4:16AM

ndakotan says, "If you are not earning an income (no matter what the reason is) you should not qualify for a loan or credit or rentals."


I am a disabled Army Veteran, should I be able to buy a house?  What about a person that was born with a genetic defect, and can not work because of it and gets a disability check?  What about someone with severe arthritis that has intense pain every time they move?  I guess we aren't entitled to that privilege due to being disabled. According to you anyway. But wait, who are you?  Probably just another ignorant person on a rant voicing their opinion rather than stating facts.  Please keep to yourself!! There is already plenty of garbage in this world.  We don't need yours as well.


Apr 13, 2012 4:07AM
Some educated people are very stupid. yeah, it sounds very considering but has more consequences than benefits. as more women are having kids without a responsible father, out of wedlock, and on welfare, how can they qualify for loans. this is the socialist way thinking how to get votes in the future.  
Apr 13, 2012 4:06AM
Again - they are talking about women on PAID Maternity leave. Some companies actually will pay moms to stay home for a few weeks after giving birth. All that this is saying is that you cannot deny a woman a loan BECAUSE  she is pregnant or on paid leave. It doesn't say you can't deny her a loan IF she is pregnant or on paid leave. She still has to prove that she has an income, either from her salary (if pregnant) or maternity pay (if on leave) and that salary has to meet the requirements for the loan. SOME BANKS have denied women loans based on the perception that many pregnant or new moms will opt not to return to work once their leave is over. However, that risk is one that exists for everyone that takes out a loan, I could buy a house tomorrow and quit my job next week. I could get laid off a month after signing. One would think that a pregnant or new mother who is buying a house for her new baby would be especially motivated to keep it, but hey it's possible they could blow it off I suppose. But you can't deny a woman (or a man) a loan based on what you think they are going to do inthe future. If they have proven to be a good credit risk in the past and have a stable job history and income, they deserve the same consideration as anyone else, regardless of how swollen their belly is at closing.
Apr 13, 2012 4:01AM
if a person does not have the income to support the loan a bank is borrowing money to someone who is incapable of paying the loan back. Now banks are suppose to loan money to those who can not pay it back, if they do that we will bail out the banks again,  Would you loan money to someone who can not pay it back ?????????/ 
Apr 13, 2012 3:56AM
They aren't talking about stay at home moms not being denied a mortgage. They aren't talking about single moms versus single dads. They are talking about women on a PAID maternity leave. These are women who have jobs. I would imagine that if you were on a paid paternity leave the same rules would apply. As they mentioned, disability income must be taken into account, which is another type of paid leave. A stay at home mom or dad would be someone outside of the workforce and as such would not have an income. Not having an income (or not enough income) would be a disqualifier for a mortgage. A single mom stil lhas to show an appropriate debt to income ratio the same as a single dad.
Apr 13, 2012 3:40AM
It sounds very caring..., but in fact it forces banks to make loans to people who don't actually qualify for them in their current circumstances.  This is the same "wishfull thinking" that created the housing collapse and our current recession.  The Government has no right or duty to tell people or institutions under what circumstances or to whome they lend their money.  The restrictions banks place on loans exist to protect the institution and it's investors from high-risk laons and investments.  If you don't qualify, then you should try saving your own money until you can post a larger downpayment,  That will prove to lending institutions that you are a deccent risk.
Apr 13, 2012 3:27AM
Long live gender equality! Oh, wait...
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