Home > Mortgages > Feds to Banks: Don’t Discriminate Against Pregnant Women

Comments 1 Comment

A California-based mortgage lender will pay $48,000 to settle allegations it denied or delayed mortgages to women because they were on maternity leave, the U.S. Department of Housing and Urban Development announced July 1. Women’s mortgage applications cannot be denied because they are pregnant or on maternity leave, because such familial status- and sex-based discrimination violates the Fair Housing Act.

A married couple filed a complaint against Greenlight Financial Services, of Irvine, Calif., saying the lender denied their application to refinance because the wife was on maternity leave. Their complaint prompted an investigation, which found four additional Greenlight applicants allegedly denied mortgages because they were on maternity leave, or their mortgages were allegedly delayed until the women returned to work.

Greenlight Financial Services will pay $20,000 to the couple who filed the complaint and $7,000 to the other four applicants. According to HUD, the company no longer issues home loans, but if it returns to mortgage lending, it will provide annual fair lending training to its employees. Greenlight, which displays an “Equal Housing Lender” icon on its website, did not return a request for comment.

This isn’t an isolated incident. During the past few years, HUD has received an increasing number of complaints from consumers saying they’ve been denied mortgages because they’re pregnant or on maternity leave. Since 2011, when the first of its kind was filed, 105 were sent to HUD, 39 of which were received since the start of the fiscal year in October.

Other lenders have settled such complaints, and more are likely to surface. It’s the strongest new trend in complaints, said Sara Pratt, HUD deputy assistant secretary for enforcement and programs, and the department is working to make sure lenders know such actions are unlawful.

The issues stem from incorrect assumptions about pregnant women and new mothers.

“What we typically find in an investigation is evidence of stereotyping and or assumptions of borrowers who are pregnant,” Pratt said. “The most common assumption is the woman will not go back to work after she has her child.”

Lenders also assume women won’t have sufficient income to support the loan when pregnant or on leave. Pratt said the women filing these complaints are qualified borrowers, but the lenders seem to have acted on stereotypes without really looking into the matters.

There have also been cases of mortgage insurance providers discriminating against pregnant and new mothers, and in some cases, loans cannot be approved without mortgage insurance. Women have often gone back to work early (which they shouldn’t have to do) in order to close out the loan.

“They say ‘We’re sorry, you’re qualified, but we won’t close the loan until you go back to work,” Pratt said. These women always planned on returning to work, but until they actually did, lenders delayed mortgage approval.

HUD is working to increase awareness of this issue among consumers and lenders, not only through education efforts but by publicizing enforcement actions like the Greenlight settlement and lawsuits carried out by the Department of Justice.

More on Mortgages and Homebuying:

Image: Brand X Pictures

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

  • Christine DiGangi

    Hi, Chloe — That part of the story comes from the news release from HUD about the settlement:

    “Under the terms of the agreement … The company will also provide annual fair lending training to employees and management staff should the lender resume its mortgage operation, a service it no longer provides.”

    (http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2014/HUDNo_14-084)

    I couldn’t get in touch with Greenlight, so while their website shows they still offer mortgage products, I wasn’t able to confirm.

    Thanks for your comment.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team