Denied a Mortgage Due to Pregnancy? Not So Fast

Lenders might want to deny a mortgage because they think a pregnant woman is less likely to repay the loan when she has a child. Or they delay the loan until she returns to work.

The problem is that federal law forbids housing discrimination based on gender or family status, according to the U.S. Department of Housing and Urban Development (HUD).

“Pregnancy is not a basis to deny or delay a loan. It’s just that simple,” said John Trasviña of the HUD. “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 have experienced this type of lending discrimination, you should file a complaint with the HUD. You could receive thousands of dollars in compensation. Here are a few examples of recent settlements:

• July 2016 — Citizens Bank paid a $40,000 settlement to a woman on maternity who was told she would need to return to work before she could get a loan, even though she was still receiving her full salary.
• September 2014 — FirstBank paid a $35,000 settlement to a married couple with twins who were denied a mortgage because the mother was on maternity leave.
• July 2014 — Greenlight Financial Services paid a $20,000 settlement for refusing to refinance a home because the wife was on maternity.
• June 2014 — Mountain America paid a $10,000 settlement for discriminating against a mortgage applicant on maternity leave.

The problem may be antiquated views of women in the workforce. In 1975, only about 35% of women with children under 18 worked. But today, 70% of moms work, including 60% of women with infants.

Yet the problem of securing a mortgage while pregnant or on maternity leave persists. It is “a significant challenge and producing a steady flow of complaints,” according to the HUD. Since 2010, the agency has investigated over 200 complaints and obtained $8 million in compensation for victims.

The Justice Department has also penalized several lenders for discriminating against pregnant women, including Bank of America, PNC Mortgage, Cornerstone Mortgage, and MGIC.

In October 2014, Wells Fargo was ordered to pay $5 million — including $165,000 payout split between six women. The bank also created a $3.5 million fund to pay $20,000 each to up to 175 mortgage applicants who experienced similar discrimination. If more than 175 people apply, Wells Fargo will pay another $1.5 million to up to 250 people.

Source: Credit.com