Mortgage Lending Discrimination Reveals the Need for More Comprehensive Maternity Leave

FirstBank Mortgage Partners (based in Jackson, TN), has agreed to pay a settlement of $35000 to rectify allegations that it violated the Fair Housing Act by denying a mortgage loan to an application of maternity leave. The complaint, filed with the Department of Housing and Urban Development (HUD) alleged that FirstBank first approved the mortgage application, scheduled the closing, and then notified the couple that the loan was denied upon learning that the wife was on maternity leave.

Sex discrimination of this sort is not uncommon; HUD has investigated 173 allegations against lenders since 2010.  Both the Department of Justice and HUD have levied monetary penalties against a handful of lenders including Bank of America, PNC Mortgage, Cornerstone Mortgage, and MGIC.

According to MomsRising, an advocacy group aimed at improving family economic security, discrimination ranges from asking young married couples when they intend to have a child to overt denial of a mortgage application.

It is illegal to discriminate against pregnant women under the Fair Housing and Labor Act in selling, renting, or financing a dwelling.  However, it is not illegal to discriminate on the basis of “creditworthiness”.  It may be lawful to factor maternity leave into a creditworthiness assessment if a mother specifically indicates that she will not return to work and has a long-term income reduction.  It is unlawful to deny a mortgage spanning 15-30 years on the basis of reduced income during a temporary leave.

The underlying assumption seems to rely on antiquated ideas that new mothers will not return to the work force and that women do not value their careers as much as men.   Bryan Greene, HUD’s General Deputy assistant secretary for fair housing and equal opportunity stated that, “in many instances, lenders just stop dead at the word ‘pregnancy’ or ‘maternity leave…and in many instances, women are planning to go back to work, but lenders don’t make those inquires. They go on the assumptions that women won’t return to work.”  However, data from the Census Bureau indicates exactly the opposite – more than 60 percent of women return to work within one year of giving birth.

The effects of lending discrimination are likely to be even more pronounced for single mothers who do not have a partner’s supplemental income and credit. Moreover, these assumptions are grossly out of touch with the increasingly disparate structures of American families.  More than four out of ten births in the United States are to single mothers.

While those who are discriminated against can file a complaint with the HUD, a long-term solution, such as paid maternity leave, must be implemented to target the root of the cause.  In the United States, maternity leave does not provide comprehensive benefits to pregnant mothers, leading to economic instability.  The United States is currently the only developed country that does not provide paid maternity leave.  The Family and Medical Leave Act (FMLA) provides 12 weeks of parental leave for some workers, but it is unpaid and workers are only eligible if they are employed by a large company or government agency.

However, awareness is increasing.  The Department of Labor just launched a #leadonleave campaign, suggesting that discourse may be shifting to acknowledge the challenges of working mothers.


U.S. penalizes lenders over maternity-related mortgage discrimination; Los Angeles Times; 07/06/2014 http://www.latimes.com/business/realestate/la-fi-harney-20140706-story.html (Accessed 09/22/2014)

Discrimination in Mortgage Lending on the Basis of Pregnancy and Maternity Leave; UC Hastings College of Law; 2010; http://www.worklifelaw.org/pubs/WLLMortgageDiscriminationBrief.pdf (Accessed 09/23/2014)

Maternity Leave and Employment Patterns of First-Time Mothers; U.S. Census Bureau; October 2011 http://www.census.gov/prod/2011pubs/p70-128.pdf (Accessed 09/23/2014)

Write a comment

Please login to comment

Remember Me

Become a Member

FREE online community for women in the legal profession.



Subscribe to receive regular updates, news, and events from Ms. JD.

Connect with us

Follow or subscribe