HUD Investigates Mortgage Squeeze on Pregnancy

By Molly M. Ginty

WeNews correspondent

Tuesday, September 7, 2010

The legality of tighter mortgage practices is being questioned by a government probe of lending-discrimination complaints by pregnant women. The case was spurred by New York Times articles and the advocacy group MomsRising.

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Kristin Rowe-Finkbeiner, executive director of MomsRising Launched in July and slated to wrap up by November, HUD's investigation may prompt better enforcement of existing laws and could change the methods that lenders use to rate mortgage applicants' financial status.

The agency has pledged to take action against errant lenders and to issue clearer mortgage application guidelines if its nationwide investigation reveals that these moves are necessary.

HUD will not release information on the lenders or women involved until its inquiry is complete.

Under the Family and Medical Leave Act of 1993, women who work for a company with more than 50 employees and who have been at their jobs for at least a year are entitled to up to 12 weeks of unpaid, job-protected leave. But according to the U.S. Department of Labor, only 8 percent of U.S. firms offer women paid maternity leave. This means the vast majority of women experience some disruption in their income after they give birth.

Tighter Employment Checks

Also complicating the mortgage application process is a stricter system of verifying income.

"In the past, you could just have your immediate boss write a letter for you," said Rick Cason, a mortgage broker in Orlando, Fla. "But now, lenders want a letter--plus a call--from your company's corporate headquarters. They want headquarters to promise you'll be back to work by a certain date and earning a certain salary. In the recession, however, people at headquarters are understandably reluctant to make that guarantee--especially if they are unaware of a faraway worker's case."

Women who have filed complaints with HUD say mortgage lenders are making them jump through more hoops than other borrowers who are on leave or disability and that this is unlawful.

The Fair Housing Act prohibits discrimination based on gender and "family status," which includes pregnancy. The Equal Credit Opportunity Act prohibits discrimination based on gender or marital status. And both acts are being violated if women of childbearing age are receiving disproportionate scrutiny.

"Many lenders may be creating extra loopholes because they assume pregnant women are less likely than other workers to return from leave as planned," said Ariela Migdal, a staff attorney for the New York-based American Civil Liberties Union. "But that sets an unfair standard. If people have knee operations, is there any way to know when they will return to work? Is there any way to guarantee that their medical procedures will go exactly as planned?"

Marc Savitt, a mortgage broker in Martinsburg, W.Va., adds that if a woman is forced in writing to guarantee when she will return from maternity leave, she could violate the terms of her mortgage and potentially lose her home if medical complications stemming from delivery keep her away for a longer time than planned.