Pregnancy a disability? HUD finds mortgage lenders denying loans to new moms-to-be

The couple, who had just had twins, thought everything was on track when their mortgage application was approved and their new home in Virginia was scheduled to close.

But when the lender – FirstBank – learned the woman was on maternity leave, it reversed its decision and refused the loan, forcing the woman and the twins to move in with her parents. There wasn’t enough space, so her husband moved into an apartment with their 3-year-old child.

In the United States, three-quarters of mothers are in the workforce, but getting a mortgage while on maternity leave or pregnancy is “a significant challenge and produces a steady stream of complaints,” said Bryan Greene, Secretary HUD Deputy General for Fair Housing and Equality. opportunity.

The US Department of Housing and Urban Development has launched 15 investigations into maternity leave discrimination this year, part of a scheme that has seen the federal agency investigate 173 allegations against lenders since 2010, a said Greene.

In the latest case, FirstBank Mortgage Partners will pay $35,000 to settle claims it violated the Fair Housing Act by denying the couple a mortgage because the mother was on maternity leave, despite planning to return to work outside the house.

Both the Justice Department and HUD have settled — and imposed monetary penalties — on a number of lenders, including Bank of America, PNC Mortgage, Cornerstone Mortgage and MGIC. The MGIC settlement in 2012 involved 70 women and led to a $511,250 compensation fund for alleged victims of discrimination and a civil penalty of $38,750.

“In many cases, we find that lenders just stop at the word ‘pregnancy’ or ‘maternity leave,'” Greene said. “And in many cases, women are considering going back to work, but lenders are not making those requests. They assume that women will not return to work.

The banks, which have denied any wrongdoing under the settlement, argue there will be a loss of income during maternity leave and women will not be able to return to work.

This assumption is “outdated, ridiculous and just plain wrong,” said Kristin Rowe-Finkbeiner, executive director of MomsRising, a national advocacy group with more than a million members.

His organization is working with HUD to combat this practice. The group asks members to write if they experience loan discrimination. The reports will then be sent to HUD.

“There’s a myth that moms aren’t as committed to work as dads are,” Rowe-Finkbeiner said. “But this isn’t the ‘Mad Men’ era with Betty Draper at home.”

Today, 50% of women return to work within three months of giving birth to their first child, she said. More than 70% of mothers of young children work and four out of 10 mothers are the sole or main breadwinner.

On the MomsRising website, Linda Falcão, a civil rights lawyer and mother of three from Pennsylvania who was one of the first people to raise the issue, said a bank told her family to write a “cover letter”.

“After asking two separate mortgage representatives to be excused from this aspect of the process (and being denied) and telling them I thought it was illegal (they didn’t seem to care), I was inspired to write a satirical letter about what was ‘brewing in my womb which I posted on a blog and shared with friends,’ she said, adding that she had not sent the mocking letter to the bank.

“We really needed the new house,” Falcão said.

After completing the loan, she filed a complaint with HUD.

Earlier this summer, HUD announced that Irvine, Calif.-based mortgage lender Greenlight Financial Services would pay $20,000 to Stefanie and Jonathan Alvanos, who filed a discrimination lawsuit. The lender will also pay $7,000 each to four other applicants.

The Alvanoses – she’s a college teacher and he’s a real estate and bankruptcy lawyer – were about to have their first child and were looking to refinance their home when Greenlight told them she couldn’t serve them. due to upcoming maternity leave.

“I couldn’t believe they would say, ‘You’re pregnant and can’t re-engage,'” Jonathan Alvanos said in a phone interview from their home in Rancho Santa Margarita, Calif. “They called it another form of disability. But I thought it was multi-level discrimination. You’re basically telling me that my wife and unborn child are a disability. I contacted HUD. I’m happy to know that they can’t work on everyone.

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