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This can’t be true- pregnant women deemed a credit risk?!?

Increasingly, families that are expecting a baby are being denied loans due to a decrease in salary (even though temporary) due to maternity or paternity leave, even when the parent declares an intention to return to work. And no, disability pay received is not being counted toward income.

I learned about families that are expecting a baby have been deemed credit risk or not credit worthy through Melissa Dittmann Tracey, Contributing Editor at REALTOR Magazine. What is most shocking is that when Melissa asked what readers thought of this new trend, only one person commented. I was shocked. Shocked! No one is outraged? Well, I am.

In a climate where buyers are already fearful that they will not qualify or they hear horror stories of fraud, lenders are shooting themselves and Realtors in the foot. Can you imagine if an expecting family was denied a home based on their familial status? Hello, fair housing?

Housing and Urban Development announced this month that they would be investigating claims that lenders are discriminating against expectant families. HUD Secretary Shaun Donovan said, “Lenders have every right to ascertain the incomes of families to determine whether they are eligible for a mortgage loan but they have no right to use a pregnancy or a short-term disability as a cause to deny that family a mortgage they would otherwise qualify for. Having a child should be a time for a family to celebrate and must not be a cause for unfair lending practices.”

I realize that this situation is not that cut and dry, and I would support this trend if it was for families expecting that one parent would not return to work, but maternity and paternity leave are normal and are supported by disability pay. It’s a temporary move. This is a shady runaround because they can’t change terms based upon a new baby (which is an added expense), and they can’t categorize it as clearly as a new car or furniture suite purchase, so those participating in this trend will use the income loophole.

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Pregnancies and home buying are complicated enough and any lender supporting this is deplorable. Expecting families are a credit risk? Really? This reeks.

Lani is the COO and News Director at The American Genius, has co-authored a book, co-founded BASHH, Austin Digital Jobs, Remote Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.



  1. Anna Altic

    August 2, 2010 at 12:01 pm

    whoa crazeee.

    • Lani Rosales

      August 2, 2010 at 1:59 pm

      I agree! Can you imagine applying for a mortgage because your family is growing and you need a bigger house and the lender says, “woah nelly, not gonna happen” !?!? Ludicrous!

  2. Benn Rosales

    August 2, 2010 at 12:50 pm

    I’m shocked. I do understand that we have to be diligent in making sure loans are given to those that can afford them, and whether or not you’re pregnant should have no bearing on the loan unless the family is letting go of income beyond the bounds of FMLA. Hud is right.

    • Lani Rosales

      August 2, 2010 at 2:00 pm

      I agree, if someone’s NOT going back to work, that’s a game changer. But maternity or paternity leave? Lenda, please.

  3. Liz Benitez

    August 2, 2010 at 1:32 pm

    I can’t believe how the lenders are trying to smudge this line. Being a mother myself I strongly agree with familial status being a part of fair housing. And boy would I put up a stink if this were to happen to me.
    A lot of people (when having a new baby) need more space so are looking for a new home. I understand if the mother was working and “does not” plan to return to work. But that only means there loan should be based on his income alone, not denied flat out.

    • Lani Rosales

      August 2, 2010 at 2:01 pm

      Liz, I couldn’t agree more. To me this is a pretty sad state of affairs given that the sector is struggling to finance good loans, why not be creative? I’d rather be financed as a pregnant mom than as a no-doc/liar loan… just sayin’.

  4. Jo Soss

    August 2, 2010 at 1:46 pm

    I guess I wouldn’t tell if I was pregnant. I can fill out an application and get through the lending process, including signing documents without anyone in the lender’s arena even knowing. I am outraged at this too. I went to work 4 weeks after the births of both my boys and so income wasn’t an issue. UGH!

    • Lani Rosales

      August 2, 2010 at 2:02 pm

      Jo, the sad part is that the people being denied probably never even gave it a second thought as to whether or not it would matter! How sad that someone would have to worry about familial status, I hope HUD slaps them and hard.

  5. Amy Cesario

    August 2, 2010 at 2:15 pm

    I have to say that the banks new rules don’t seem to surprise me anymore. I do think we as consumers, REALTORS, and leaders in our communities need to be aware of the issues and push to make things right. Many women work the day they have babies and never take any time off before or after (I know many real estate agents who have had to do this for many years). As leaders in our communities and industry, let us know who we need to write to, to make sure it doesn’t continue.

    • Lani Rosales

      August 2, 2010 at 2:36 pm

      Good question, Amy. I would think that contacting your Public Housing Authority and sharing this article (or the HUD press release or the NAR article) with them via email and adding your voice and urging them to help HUD enforce the law in your area and that you cannot support this behavior.

  6. Melissa Zavala

    August 2, 2010 at 11:01 pm

    What’s up with the name ‘Melissa’ today? Your new writer and now this. Hey, if they can check the papers of all Hispanics in Arizona just because of their appearance, then they can certainly do this. It’s what we can do about it that will change things!

    • Lani Rosales

      August 3, 2010 at 11:56 am

      I don’t know why, but “Melissa, Melissa, Melissa!” just came to mind (said in the tone of Jan’s whine about “Marsha, Marsha, Marsha!”). lol

  7. Ruthmarie Hicks

    August 3, 2010 at 12:52 am

    No personal experience, but through the grapevine I heard of this with respect to the other end of the spectrum. Someone who is scaling back to a smaller house after retiring. Even though the money they had is enough to keep them comfortable for about 40 years – the answer to the loan was “no.” Why? No steady income!

    Sooooo, let me get this straight, you can’t create a secure environment by scaling back because retiring means that you will be depending on a pension and the $2 million+ that you managed to save? What is wrong with this picture?

    Please note that this was not my client – so the particulars are second-hand. However, given this incident, it doesn’t surprise me that the discrimination would work the same way for families having a baby. Insane….let’s just destroy the industry altogether. Let’s make it impossible for a family to move for the #1 reason WHY families move!

    • Lani Rosales

      August 3, 2010 at 12:07 pm

      Ruthmarie, exactly. It strikes me as odd that a life change that can be financially supported is poo pooed because life changes are suddenly being deemed a credit risk, but like you outlined above, they’re the REASON for most of the moves and most of the transactions in the first place. Way to handicap an industry, you small group of idiot lenders. Thank God for the good ones out there!!

  8. Nadina Cole-Potter

    August 3, 2010 at 11:24 pm

    Some states, like Arizona, I was shocked to learn when I moved here from California and was on someone’s payroll then, do not have short-term disability. In California, it is a deduction from the employee’s pay check and is managed by the Employment Development Department. I had a great employer in the 1980s and 1990s which, in a short term disability, say 6 weeks, would pay the difference between the state’s payout and regular salary.

    I am old enough to remember when women wouldn’t be admitted to graduate school or advanced professional training because “they will only get married, get pregnant, and quit their jobs and won’t use their (expensive) training.” Or, if they did have advanced training like Sandra Day O’Connor, they wouldn’t be hired by professional firms for the same reason.

    An employer can’t refuse to hire or promote a woman who is pregnant on that basis (and good luck trying to prove it!). Married women now have credit in their own names (I remember in the early ’70’s when we didn’t and if divorced or widowed, credit left home or the earth with hubby). So this new twist of denying mortgages to otherwise qualified pregnant families is really a reversion to the bad old times.

  9. Erica Ramus

    August 12, 2010 at 8:40 pm

    Yep, had a client today who closed on a loan. Underwriter asked if wife was pregnant??? Answer was no but it still is an insulting question.

    I am a mother of 2 and I worked FULL TIME throughout 2 pregnancies. It is nobody’s business if you plan on getting pregnant or not.

    Does a man plan on getting hurt at work or anyone plan on getting cancer? And those can affect your future income as well!

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