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."

 

 
70Comments
Apr 12, 2012 3:46PM
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No. A single father can't be on maternity leave. A single father would be on family leave (as in FMLA- which is unpaid). MOST companies don't have paid maternity leave.  5 years ago ,I was pregnant and my boss tried to fire me because I was pregnant. He cited his "strong , Christian Faith" as a reason that I belonged , "in the home". I contacted my union, they protested. He  refused to talk to the union rep or his bosses. I got to keep my job.
Apr 12, 2012 3:46PM
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I applaud the lenders for taking steps to ensure that there will be sufficient means to pay for the mortgages that the pregnant women are applying for.  I don't think it is fair to deny a pregnant woman just for that reason alone, but the banks do need to ensure that the maternity leave doesn't continue indefinitely.  Making sure that applicants will have means to pay their obligation is what will make sure we don't have another mortgage crisis.
Apr 12, 2012 3:44PM
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I was a single father, 3 children now grown, and I can tell you single fathers get screwed by lenders every day. I got married after my children were grown and have had no problems getting financing for a house since. This really does need to be addressed. Most single fathers have higher incomes than single mothers. Single parents should be in the same group. Less government would also do all american  a great service.
Apr 12, 2012 3:40PM
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As a single father of two young daughters, I also get disgusted by the amount of rules and regulations out there to help protect single mothers, but single fathers are left out in the cold.  They really need to make one little change and say single parents.

 

Apr 12, 2012 3:37PM
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I wish I could fit into one of these "groups" that gets all the special privleges. I've been waiting all my life. I can't change my race or gender I guess I'm screwed.

Apr 12, 2012 3:31PM
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i AM SINGLE FATHER OF 14 YR OLD DAUGHTER...SO i SAY TO YOU...AMEN TO THAT,,,, BROTHER
Apr 12, 2012 3:16PM
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So, as a single father....is there any special rules for me? Can I be denied a loan because I'm a single income household and I am the sole provider for a 16 year old boy and 13 year old girl? Where are the special provisions for that. I tell you, the single father who steps up and takes responsibility to raise their children with no assistance is the one who is consistantly screwed. ALL miniorities think they got it rough, but it's the single father who is the one who really gets screwed.
Apr 12, 2012 3:04PM
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This is all part of the nanny state.
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