If your wife or significant other is pregnant, then you might want to leave her at home when you go to speak to the bank about a loan. Mortgage companies are looking askance at expecting couples as a higher risk for default since their income will likely temporarily fall while one or both parents take leave to care for the infant. In fact, some lenders are balking on loans even if the parents plan to return to work just a few weeks following the birth, reports the New York Times[1].
One mortgage broker explains that a pregnancy calls otherwise “guaranteed” income into question, since the economy is already uncertain and leaving a job, even temporarily, could mean that there is no employment to return to later, should complications arise. This means that if you are expecting and will actually be on maternity or paternity leave when you close, then you may need to look for homes you can afford on one salary since many lenders are rechecking loans right before the loan closes, and this includes calling employers to verify employment. Even mothers who receive disability or paid maternity leave may find their ability to pay a loan called into question, and closing may be delayed while the parent or parents reapply for a new loan under their new – however temporary – circumstances.
Do you think that it is fair to “penalize” pregnancy?
Thank you for reading! Your comments and questions are welcomed below.
[1] http://www.nytimes.com/2010/07/20/your-money/mortgages/20mortgage.html
This is just factoring the risk involved and is long overdue.
There is no pregnancy penalty just cautious risk assessment.
This is just good business decisions based on the emperical
evidence.
Do you think it is fair to penalize being single as we have to
pay higher taxes and pay for services that we don’t use
example property taxes to fund schools when we have no children?
When will you write an article about the penalties of being single?
I believe this makes for a juicy headline and attention getter. As such it certainly achieved its purpose.
The point is whether the payment is affordable or not. Borrowers who could go into default because of a temporary income cut known in advance should wait a bit and rent. I would say that is common sense.
Besides, there is a good chance properties may deflate some more. A good deal will still be around a year from now.
This is just another form of the Eugenics leanings of this administration. The health care bill is die when you are older and get sick. The Financial Reform package is leave the real problems alone, Freddie and Fannie and screw the middle class into the ground. This is just part of the new financials Obama signed into law. This is not new news about the pregnancy issue, just new to people outside of the Financial Reform Bill.
The issue about being single and screwed by the government is nothing new, do not see anything but that getting worse now! It is now just throw the Pregnant people on the pile too.
Banks talking about doing things the right way. Making certain that the funding decision meets all minimum standards for investment quality loans and insuring all guidelines are adhered to? Yeah, Right. Like they did between 2003 and 2007? And I am supposed to CARE about the banking industry? I think not. Everybody start closing out your bank accounts and move to credit unions. Put the banks OUT OF BUSINESS. They are SELF SERVING ENTITIES who only care about their own bottom lines and will stoop to whatever level of sliminess they have to in order to make a buck.
JG makes some good points – I agree with you JG.
Chris – you’re passionate and I don’t doubt your intelligence or desire to do good. On the other hand, turn off the Limbaugh, fox “news” echo chamber and do your own review of the FACTS.
Slundin – yes, support LOCAL community banks where you can actually have a relationship, accountability, and they invest in the local community. The big banks want to treat us as nothing but an account number to fee and penalty to death? Fine, let’s withdraw the lifeblood and starve ‘em.
Look folks, we have 7+ billion people on the planet and we don’t exactly do an exemplary job in managing ourselves:
Millions of humans succumb to “avoidable mortality” each year – starvation, war, pollution, etc
Our ocean ecosystems are nearly dead, CO2 levels are higher than they’ve been in over 650,000 years (in that time, far longer than homo sapiens have been around btw, the CO2 level ranged between 180-300ppm); we are now @ 392ppm and rising….
So, long story short because the data goes on and on, reducing our numbers is a prudent action. So any additional dis-incentive to reproduce is not necessarily bad.
There are many great parents out there; there are also many terrible ones who are nothing but tissue donors to reproduction.
Keep in mind: Most of us are here by ACCIDENT.
A new child obviously causes stress on a household budget – children, esp US children, are EXPENSIVE.
Though I am certainly NO fan of the TBTF banks, I know if I was making a loan, I would look twice if someone was about to blow a big hole in their household balance sheet. It’s a very real factor to underwrite.
This is a throw back to history pre 1980. The banks would not consider my mothers income for qualifying for a loan because she might get pregnant and stop working. I agree with Slundin who cares about the banks. They and their executives made a ton load of money making unwise loans. They get bailed out by the taxpayer and the executives get bonuses. One thing I am sure about is there is a lawyer out there who take the banks action and make a lot of money from a civil discrimination lawsuit.
In defense of banks, you cannot find a more over regulated industry than banking. The Fed and government has told them everything they can and cannot do since the time of Carter and Ted Kennedy’s push to collapse the financial markets in this country in the name of making it so everyone would own a home.
Before people get to bashing the banks too hard, they do have their faults, look up some facts about how little they can do on their own and how much of their time is spent attempting to conform to Government regulations. Over half of the staff of any bank is there just to meet Reg E and a slew of other constantly changing regulations the government imposes willy-nilly on them.
If you want some one to be angry at look to the controlling agencies like the Treasury, Fed and FDIC.
CAFA,
If you learned to read history, you would know I am not repeating anyone’s views except the facts of what has happened over the last century and what is happening now.
If is so typical of the uninformed like yourself to attack others without any idea about what you are talking about except some progressive’s line you think sounds good.
If you were any good at paleobotany, you would know that the levels of CO2 are not close to what they have been in the past. You would also know that most of the information about CO2 levels, global warming, and the like are not based in verifiable facts just assumptions based on flawed models by people that cannot even predict the next years storm cycles accurately.
Maybe you are here by ACCIDENT, but I am not!
From University of California Davis, I quote;
“Carbon Cycle and Computer Models
So many processes have to be considered in the carbon cycle that it is extremely difficult to keep them in mind, and impossible to calculate without building a computer model to simulate them. Scientists interested in the carbon cycle have built a number of such models over the years. Such models can have between 50 and 100 interacting equations describing all the different processes of the carbon cycle that are relevant to the problem of how carbon dioxide changes through geologic time.
To what extent should the answers generated from such models be trusted? Consider this: if there are a dozen processes which we need to understand, and we only grasp each process within an error of 20 percent, the sum-total of the error adds to more than 200 percent! That is, if we now state that the content of carbon dioxide in the air so many million years ago had to be X, the true answer could be anywhere between 3 times X (200% more than stated) and X divided by 3 (200% less). Even if we make the reasonable assumption that half of the errors will cancel, we still get roughly a factor of two error on either side of the uncertainty statement. Thus, at the present state of knowledge, computing the answers will get us ballpark estimates and overall trends but not much more. Now you can appreciate why the range of errors plotted in the figure above are so large.”
As you can see from the numbers here the amount of certainty is well outside of the numbers you quoted to the point of making such fine assumptions totally meaningless.
So I agree learn to use facts and do some research before you go off with stupidity that has no meaning!