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Borrowers Experiencing Financing Issues Related to Pregnancy

By
Real Estate Broker/Owner with Jonathan and Associates, Inc

pregnantThis week, the New York Times ran a story of that is of interest to anyone seeking to obtain a mortgage while they are pregnant.  It seems that many mortgage originators are denying loans to potential borrowers if they learn one of the borrowers is pregnant and on maternity leave.

The reason they give for denying the loan due to pregnancy and child birth is that the maternity leave is not steady income.  Also, some spouses decide not to return to work following the birth of the child, which may affect their debt-to-income ratio.  

Is denying someone a loan simply because they are pregnant discrimination? YES

Instead of simply stating that the pregnancy is a factor was the reason, the mortgage originator retreat to the investor's guidelines.  Neither Freddie Mac, Fannie Mae, or the FHA state that a loan can be declined because of pregnancy.  However this is the originator's call and if they so choose, they can say that maternity leave isn't steady income.

If you are or planning to start a family soon and need both incomes to qualify for the loan, my recommendation would be to never discuss such matters with your lender. 

 

Show All Comments
Wendy McSteen
Spring Realty Inc. - Channahon, IL

Hi Jonathan:  I saw this article as well.....this is nuts.  Thanks for writing this post because the public needs to know this is happening out there.   Think I need to post the NYT article on my FB fan page. 

Jul 23, 2010 12:56 AM
Harry F. D'Elia III
WEDO Real Estate and Beyond, LLC - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

This is ridiculous to me. Just another example of Big Brother in your home. Stop the madness please.

Jul 23, 2010 01:08 AM
Bill Travis
Captain Bill Realty, LLC - Gilbert, AZ
Broker/Owner

Hi Jonathan, too bad this is happening.

That's a great photo. Which one is pregnant?

Jul 23, 2010 01:12 AM
John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

LOL I didnt see the article, but in my 16 years I have never had someone declined because of being pregnant (and yes, I have worked loans where the wives are pregnant). But I guess the article is not so much about the prenancy, but the income itself. We also have an issue with Disability income. If we are unable to prove that the income will not continue for at least 2 years, then we are unable to use it.

Its best to either qualify by not including the income OR wait until you have started back to work and then the income can be counted again. Certainly, they are not being declined due to pregnancy though. Ultimately, the lenders need to be sure that they will GET PAID. Otherwise, they 'may' have another property on their hands in 6 months to a year. No body wants that.

Jul 24, 2010 06:06 PM
John Mogannam
Sierra Pacific Mortgage - Folsom, CA

How about this should never come up in a disscussion with a client.  I mean never.  Flat out discriminationan.  What a great way to get yourself and your compnay in deep doodoo.

Sep 05, 2010 08:21 AM
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