You probably thought that if you had enough money and a sound enough credit score, you could land a home loan. However, if you go into a bank with a baby bump, some lenders may write you off instead of underwriting you, says the Department of Housing and Urban Development (HUD). HUD recently initiated a probe to investigate “dozens” of complaints that mortgage lenders are “allegedly denying or delaying loans because a woman is on maternity leave.” This is a violation of the Fair Housing Act, which prohibits lenders from using parental leave on the part of either parent as basis for denying an otherwise qualified buyer.
While some might consider it understandable that lenders would be wary of lending to women who may not be receiving pay at the time of their loan origination or who may opt not to go back to work after the birth of their child, the Fair Housing Act demands that such concerns not be factored into loan originations. HUD based its investigation on a report by the New York Times in which brokers alleged that lenders were “scrutinizing the incomes of new parents more closely as a result of the more conservative lending climate”. Some lenders like PNC Mortgage, have already settled up with angry borrowers who allege this type of wrongdoing. However, none have admitted actual fault.
According to the Fair Housing Act, lenders cannot even ask you if you are expecting a child. Have you ever encountered this type of discrimination when seeking a home loan?