Online Calculator | Pregnancy Hurts Mortgage Lending

Pregnancy Hurts Mortgage Lending

If you need to start your family but additionally need the house for it, you need to know something important. You can’t get a mortgage loan in case you are pregnant and quitting your job for the family. Because of all the bad lending that’s happened recently, mortgage lenders just won’t do it. 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.

Pregnancy discrimination because of mortgage lending standards

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 demands that borrowers be qualified for the loan they’re receiving on the day the loan closes rather than when the papers are all signed and finished. The income has to be guessed to continue for the next 3 years also for the loan.

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. 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, but they needed both of their salaries to qualify. The mom is not “employed” anymore after the child is born and won’t qualify for the loan at closing anymore.

Anyone wanting a home isn’t covered within the Pregnancy Discrimination act

Income is what mortgage lenders use as a determining factor, not pregnancy. Lawyers.com reports that the Equal Credit Opportunity Act prohibits lenders from discriminating against gender and marital status. The act also makes it impossible for mortgage lenders to ask about your kids raising plans. 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 calls is sex discrimination when someone discriminates against a woman who has anything related to childbirth going on in her life. But the Pregnancy Discrimination Act only applies to employment, not borrowing.

Sources for the article

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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