If you’re starting a family and would like to purchase a house to raise your kids in, there’s something you should know. Women who plan on staying home with their kids and are presently pregnant can’t get a mortgage loan if they tried. Because of all the bad lending that’s happened recently, mortgage lenders just won’t do it. The couple doesn’t meet strict standards is the excuse mortgage lenders use to avoid being in violation of the Pregnancy Discrimination Act. Post resource – Mortgage lending- Don’t get pregnant if you want to buy a house Personal Money Store.
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. The New York Times reports that Fannie and Freddie require lenders to recheck a borrower’s financial situation right before the loan closes. Under the loan quality initiative, lenders must document that borrowers have enough income to pay for the loan on closing day, not following the contract was signed. If you would like the loan, you also have to prove that you will have that income for an additional three years.
Maternity leave a red flag for mortgage lenders
Some mortgage lenders are flirting with pregnancy discrimination because of maternity leave. Mortgage lending standards interpret maternity leave as short term disability insurance. Because the disability payments will not continue for 3 years, Fannie and Freddie mortgage lenders will not count maternity leave as qualifying income. The mortgage has to be applied for again after going back to work. The times article shows an example with a couple that is expecting in the relatively near future. They wanted to make an offer on a home, however they needed both of their salaries to qualify. The mortgage broker said the expectant mother would not be considered “employed” when it was time to close the loan, which would probably disqualify her.
Any person wanting a home isn’t really covered in the Pregnancy Discrimination act
Mortgage lenders say they’re not discriminating against pregnancy but against 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 expenditures related to your dependents. The federal government moved to make pregnancy discrimination illegal in 1978. The Pregnancy Discrimination Act declares that discrimination due to pregnancy, childbirth or related medical conditions is unlawful sex discrimination. The act was really only placed for employment purposes.
More information 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
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