Avoiding pregnancy with mortgage lending

If you are starting a family and would like to buy a house to raise your children in, there’s something you need to know. Women who plan on staying home with their children and are at the moment pregnant can’t get a mortgage loan if they tried. Because of all the bad lending that’s happened most recently, mortgage lenders just won’t do it. There is a Pregnancy Discrimination Act that doesn’t allow this; nevertheless, mortgage lenders get away with it saying strict standards aren’t being met by the couple.

Strict lending standards for mortgage loans cause pregnancy discrimination

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. 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.

Maternity leave looks bad 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 do not continue for 3 years meaning lenders working with Fannie and Freddie will refuse to count maternity leave as income. You won’t be able to apply for a mortgage loan again until you are back to working full time. The times article shows an example with a couple that is expecting within the relatively near future. Both salaries would be required to qualify for a loan on the home they wanted. The mom is not “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

Pregnancy is not being discriminated against, as outlined by mortgage lending; it’s just income. Equal Credit Opportunity Act shows on Lawyers.com that marital status and gender can’t be discriminated against. The Equal Credit Opportunity Act also bars lenders from asking about your plans for having or raising children. Any questions about expenses could be asked though. 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. The act was really only placed for employment purposes.

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