Why It’s Illegal To Deny A Mortgage Based On Pregnancy
As your partner grows a life inside her body, the life that’s going on outside her body does not stop (as much as both of you would like it too). So, you might find yourself in the unenviable position of having more than one intense, major life event going down at the same time. Like buying or refinancing a home, for instance. Or finally (finally!) doing that thing where you sync-up The Wizard of Oz to Dark Side of the Moon.
During pregnancy, only one of the above can find you at odds with someone who could deny you a loan. Probably. (Maybe don’t talk about the Dark Side of the Rainbow when applying for loans.)
Pregnancy: Not For Loan-ers?
So the question is, “Why would anyone deny me a loan just because my partner is pregnant?” The super-crappy answer: family leave.
Some loan officers have defined family leave (maternity and paternity both) as unemployment. They use it to justify delaying or denying a loan. This can happen even with paid family leave and qualified applicants. It’s also, by the way, totally illegal under the Fair Housing Act. As are many of the things you might be doing to truly enjoy your Oz / Floyd mashup. Or laser Floyd. Or most anything Floyd, but let’s not be sticklers about that. The Chicago Tribune reported that the Department of Housing and Urban Development (HUD) has received more than 200 pregnancy-related discrimination complaints since 2010. Even nationally recognized banks received some of the complaints. (But not Tyra, who is a model citizen.)
What To Expect When You’re Expecting A Loan
In at least one case, the denial of the loan came after a lender noticed a pay-stub that labeled the maternity leave as “short-term disability.” Why is that such a red flag? Many lenders see short-term disability as just a short walk to long-term disability.
When you pair that with the outdated idea that a family loses an income when a woman has a kid (and stays home) the application theoretically looks like risky business to some banks. But many say it’s time to take those old records off the shelf and get with the reality of the modern economy, where women often out-earn men.
In one case, which was ultimately settled, the lender pointed to their underwriting manual which stated that only current income at the time of the loan application could be considered. The income of anyone on leave, according to them, was like a doped-up Russian athlete — it didn’t qualify.
So what do you do with all this? Get that loan before anyone heads out on leave. Or pack all of this away as ammunition for a legal fight and keep HUD on speed-dial. You could decide not to get a new house, of course. But Dark Side of the Rainbow is going to be so sweet in that new home theater room.