HUD Investigates Mortgage Squeeze on Pregnancy

By Molly M. Ginty

WeNews correspondent

Tuesday, September 7, 2010

The legality of tighter mortgage practices is being questioned by a government probe of lending-discrimination complaints by pregnant women. The case was spurred by New York Times articles and the advocacy group MomsRising.

(WOMENSENEWS)--When Olivia Salvador tried to close her mortgage loan in March, she hit an unexpected snag.

"My husband and I were unable to close due to my being on maternity leave," said Salvador, of Oakland, Calif. "Though I was preapproved for my loan, though I was employed and though my leave was federally protected, I was told that in the eyes of my lender, I was unemployed, and thus didn't meet the financial qualifications for my loan. We had to bargain for extra time with our seller and had to wait until after my leave to buy our home."

Complaints such as these were brought to light by the New York Times in a series of stories written by Tara Siegel Bernard in July.

In response, MomsRising, the Seattle-based advocacy group, e-mailed its one million members and received about 120 similar e-mail complaints. The organization then forwarded these to the U.S. Department of Housing and Urban Development, known as HUD.

Now HUD is investigating whether lenders are denying mortgages to women who are pregnant or on maternity leave in violation of the Fair Housing Act of 1968 and the Equal Credit Opportunity Act of 1973.

"We've received seven formal complaints so far and anticipate fielding more," John Trasvina, HUD's assistant secretary for fair housing and equal opportunity, told Women's eNews recently. "Such reports are profoundly disturbing and require immediate action."

Trasvina said press coverage by the New York Times and other publications, combined with pressure from MomsRising, spurred the investigation.

Tightened Lending Rules

Fannie Mae and Freddie Mac--the two Washington-based, government-sponsored mortgage giants that back most conventional home loans--tightened their lending rules earlier this year.

Since then, lending-rights advocates say borrowers with potential dips or gaps in income are having trouble getting mortgages. That can mean injured workers collecting disability insurance or those who have recently lost jobs or work hours.

Kristin Rowe-Finkbeiner, executive director of MomsRising, thinks pregnant women are bearing the brunt of stricter lending practices.

"Tighter guidelines are affecting many mortgage applicants," she said. "But the problem is that they're affecting women who are pregnant or on maternity leave in disproportionate numbers."

"Mortgage underwriting guidelines have long said that an applicant has to prove she'll have a steady income for three years," said Robert Strupp, a spokesperson for the National Community Reinvestment Coalition, in Washington. "In the past, lenders didn't pay close attention to these guidelines. But now that there's more scrutiny, lenders are rejecting women if they receive a pay cut or go on disability during maternity leave because this creates a gap in their income."

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