Maternity Leave No Longer A Barrier To A Mortgage
There was quite a stink during 2010 surrounding the decision by many lenders to deny home loans to couples where one (or both) partners were on maternity or paternity leave. The Department of Housing and Urban Development (HUD) took umbrage at these decisions and investigated several mortgage firms and mortgage insurance providers. The end result will please many couples, especially those about to become parents while in the process of seeking a mortgage.
The Fair Housing Act prohibits housing discrimination in sales, rentals, and lending based on a person’s sex or familial status so it’s no surprise to see the HUD win a settlement with one of those lenders that did discriminate. This clearly lays a precedent for other lenders now and it’s a precedent that’s very clear.
In the past, some lenders have looked at maternity leave income and disregarded it as short term, even though the parent in question was returning to work. Lenders must now include this income in their calculations when assessing home loan applications. Discrimination has been widespread on the issue of maternity (or paternity) leave. The Department of Justice has now begun legal proceedings against the nation’s largest mortgage insurer, Mortgage Guaranty Insurance Corporation (MGIC), for discrimination against women on maternity leave.
A press release from the Department of Housing and Urban Development stated unequivocally that:
- Mortgage professionals may verify income and other resources and have eligibility standards but they may not single out women on maternity leave to deny or delay loans that they are otherwise eligible for.
If you’re pregnant, or on maternity leave, you are still eligible to apply for mortgages, and the lenders must take into account your current income.
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