If you’re beginning a family and would like to buy a house to raise your kids in, there’s something you should know. Women who are pregnant and plan to stay home to take care of the baby may not qualify for a mortgage loan. Mortgage lenders are too scared that they won’t get their payments with this situation. The couple doesn’t meet strict standards is the excuse mortgage lenders use to stay away from being in violation of the Pregnancy Discrimination Act. Post resource – Mortgage lending- Do not get pregnant if you want to purchase a house Personal Money Store.
Pregnancy discrimination because of mortgage lending standards
Pregnancy discrimination by mortgage lenders may be an inadvertent consequence of a loan quality initiative that was launched earlier this year by Fannie Mae and Freddie Mac. Before loans are finished, the financial status of a borrower has to be checked again because of the initiative, as outlined by the New York Times. 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. The income has to be guessed to continue for the next 3 years also for the loan.
Lenders hate seeing maternity leave
Maternity leave makes it easier for mortgage lenders to get away with pregnancy discrimination. Mortgage lenders see simply a short term disability insurance they have to deal with. Because the disability payments will not continue for 3 years, Fannie and Freddie mortgage lenders will not count maternity leave as qualifying income. These mortgage lenders will require the new mother to reapply for the mortgage once she returns to work. A couple expecting within the next few weeks is an example used by the Times article. 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.
Pregnancy Discrimination Act doesn’t include mortgage borrowers
Pregnancy isn’t really being discriminated against, according to mortgage lending; it’s 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. Lenders are allowed to ask anything they want about expenses, even about your children’s expenses. Pregnancy discrimination became illegal in 1978. The Pregnancy Discrimination Act declares that discrimination due to pregnancy, childbirth or related medical conditions is unlawful sex discrimination. But the Pregnancy Discrimination Act only applies to employment, not borrowing.
Citations
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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