Avoiding pregnancy with mortgage lending

If you are beginning a family and would like to buy a house to raise your children in, there’s something you should know. Women who plan on staying home with their kids and are currently pregnant can’t get a mortgage loan if they tried. Because of all the bad lending that’s happened lately, mortgage lenders just won’t do it. Despite the Pregnancy Discrimination Act, mortgage lenders say they’re denying mortgages to expectant couples because they must comply with strict new standards for verifying income.

Discrimination caused with mortgage lending standards so strict

Freddie Mac and Fannie Mae began a loan quality initiative which is where the pregnancy discrimination is coming from. Fannie and Freddie made is required for a loan to go out that the financial status, reports that New York Times, has to be checked at the end of the process. Under the loan quality initiative, lenders must document that borrowers have enough income to pay for the loan on closing day, not after the contract was signed. Lenders also must document that the mortgage borrower’s income is likely to continue for at least 3 years.

Mortgage lenders have no mercy with maternity leave

Discriminating against pregnant women is easier when looking at the maternity leave that have to be taken. Mortgage lending standards interpret maternity leave as short term disability insurance. Anybody with maternity leave won’t qualify for loans with Fannie and Freddie as the payments don’t continue for three years. You won’t be able to apply for a mortgage loan again until you are back to working full time. The times article shows an example with a couple that is expecting within the relatively near future. The house they wanted needed both salaries for them to be able to get a mortgage loan. The mother won’t qualify when the loan closes anymore since she isn’t “employed” any longer.

Mortgage borrowers not covered by Pregnancy Discrimination act

Pregnancy isn’t really being discriminated against, according to mortgage lending; it is just income. When it comes to lending, Lawyers.com teaches us that gender and marital status are the only things protected. The Equal Credit Opportunity Act also bars lenders from asking about your plans for having or raising children. However, lenders can ask questions about expenses related to your dependents. In 1978, pregnancy discrimination was no longer allowed. The Pregnancy Discrimination Act shows us that being prejudice against women who are pregnant, or anything like it, is just sex discrimination. The act only refers to employment though.

More info on this topic

New York Times
nytimes.com/2010/07/20/your-money/mortgages/20mortgage.html
Lawyers.com
lawyers.com/our-blog/archives/251-Pregnancy-Leave-Puts-Mortgage-in-Doubt.html