Despite Regulations Mortgage Lenders Still Discriminate Against Pregnant Borrowers
Pregnancy could be jeopardizing your chances of getting a new home, according to the US Department of Housing and Urban Development (HUD).
In 2014 alone, HUD has launched 15 maternity leave discrimination investigations. Since 2010, there have been 173 allegations of lender abuse against expecting borrowers. The most recent offense was resolved this summer. In June, HUD announced that one of Utah's largest credit unions - a $3.6 billion operation - would pay $25,000 to settle "allegations that the company discriminated against prospective borrowers on maternity leave."
In 2011, the US Department of Justice filed a lawsuit against the Mortgage Guaranty Insurance Company (MGIC) on behalf of 70 plaintiffs. MGIC required women on maternity leave to "return to work" before the company would insure their mortgages, even if they presented a guaranteed right to return to work after the leave. The company ultimately paid over half a million dollars to set up a compensation fund for affected victims, then another $38,750 damages in 2012.
HUD and the US Department of Justice (DOJ) have fined a longer list of agencies found guilty of violating the federal Fair Housing Act. Bank of America, Cornerstone Mortgage, and PNC Mortgage have all had to pay tens of thousands of dollars in compensation for denying loans because a borrower was pregnant or preparing to go on maternity leave. The Fair Housing Act prohibits housing discrimination on the basis of race, religion, sex, disability or familial status.
According to US Census data from 2012, at least 62 percent - nearly two-thirds - of all parents who'd given birth in the previous year, were in the labor force. Even so, HUD General Deputy Assistant Bryan Greene said lenders simply assume a parent won't return to work after pregnancy.
"The birth of a child or children should be a happy time for a family," Greene said. "But in many instances, we find lenders just stop dead at the word 'pregnancy' or 'maternity leave...and in many instances women are planning to go back to work, but lenders don't make those inquiries."