Mortgage lending- Don’t get pregnant if you would like to buy a house

If you are starting a family and would like to buy a house to raise your kids in, there’s something you need to know. Women who plan on staying home with their kids and are currently pregnant can’t get a mortgage loan if they tried. Mortgage lenders are too scared that they won’t get their payments with this situation. Despite the Pregnancy Discrimination Act, mortgage lenders say they are denying mortgages to expectant couples because they must comply with strict new standards for verifying income.

Discrimination caused with mortgage lending standards so strict

Pregnancy discrimination is happening because Fannie Mae and Freddie Mac start a loan quality initiative long before they were ousted. The New York Times reports that Fannie and Freddie require lenders to recheck a borrower’s financial situation right before the loan closes. The loan quality initiative calls for that borrowers be qualified for the loan they’re receiving on the day the loan closes instead of when the papers are all signed and finished. The income has to be guessed to continue for the next three years also for the loan.

Maternity leave makes it look extremely hard to mortgage lenders

Maternity leave makes it easier for mortgage lenders to get away with pregnancy discrimination. Mortgage lending standards interpret maternity leave as short term disability insurance. The disability payments don’t continue for three years meaning lenders working with Fannie and Freddie will refuse to count maternity leave as income. These mortgage lenders will require the new mother to reapply for the mortgage once she returns to work. The Times article used the example of a couple expecting a baby within weeks. They wanted to make an offer on a home, however they needed both of their salaries to qualify. The mom isn’t “employed” anymore after the child is born and won’t qualify for the loan at closing anymore.

Pregnancy Discrimination act doesn’t mean those wanting a home

Mortgage lenders say they are not discriminating against pregnancy but against income. Lawyers.com reports that the Equal Credit Opportunity Act prohibits lenders from discriminating against gender and marital status. The Equal Credit Opportunity Act also bars lenders from asking about your plans for having or raising kids. Lenders are allowed to ask anything they want about expenses, even about your children’s expenses. 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.

Additional info at these websites

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