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.
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."
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.
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!
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.
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.
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
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.
About Teresa Mears
Teresa Mears is a veteran journalist who has been interested in houses since her father took her to tax auctions to carry the cash at age 10. A former editor of The Miami Herald's Home & Design section, she lives in South Florida where, in addition to writing about real estate, she publishes Miami on the Cheap to help her neighbors adjust to the loss of 60% of their property value.