7/11/2014

Maternity Leave is NOT a Reason to Not Get Your Mortgage


Every day we are hearing that many buyers are having a tough time getting a mortgage, and there are real reasons lenders are not giving out loans to certain buyers. But one thing that's not supposed to be happening is discrimination:

Several banks, including Bank of America, PNC Mortgage, Cornerstone Mortgage, and at least one insurer, MGIC, have been found guilty have been penalized for delaying or denying applicants because of pregnancy and/or upcoming maternity leave. We thought such discrimination was behind us, but apparently not.

Lenders see a time of reduced income, and assuming this, have been denying mortgage approvals.  Apparently quite a few women have complained, because the insurer MGIC was guilty of denials for at least 70 women.  Mountain America Credit Union, based in Utah, was also found guilty, in addition to other mortgage insurers.

In spite of the numbers of working mothers in this country, some lenders still believe that a woman's commitment to the workplace diminishes after having a child.  According to MomsRising, a  national advocacy group, three quarters of all mothers are working women.

However, federal law assures an applicant: “Any denial or delay of a mortgage application, according to fair lending regulations, violates the federal Fair Housing Act, which prohibits any form of unequal treatment based on gender or familial status”. 

HUD and the Department of Justice have levied monetary penalties against the offenders, even though they say they are following underwriting guidelines and have done nothing wrong.

Ironically, lenders DO NOT accept the birth of a child as a reason for reduced income or any other financial impact when a distressed borrower applies for a short sale from a lender , so why is it being given as a reason for denial of loan approval?

See this article by Ken Harney: http://www.latimes.com/business/realestate/la-fi-harney-20140706-story.html 

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