Sex Discrimination Alive and Well in Mortgage Lending

There is little doubt that, most housing discrimination cases that arise under the Fair Housing Act involve racial and disability based discrimination. Other cases of discrimination such as those based on sex or gender are subtle and often rare. Yet the Department of Housing and Urban Development (HUD) says that a round of recent fair housing complaints and mortgage discrimination charges prove that sex discrimination is alive, well and on ascending.

As pointed out in this blog, the Fair Housing Act prohibits discrimination against a renter or a homeowner based on race, disability, color, religion, national origin, familial status and sex. Thus, gender-based discrimination in lending practices is illegal. This includes claims for imposition of different mortgage terms, and claims for refusal to extend a loan based on the gender of the applicant or buyer.

Despite these protections, investigations by HUD and the New York Times show that, accessing a mortgage is more difficult if you are a pregnant mother.  According to HUD, it receives regular complaints that banks and brokers deny women loans based on pregnancy or maternity leave.  Some lenders single pregnant women out for different treatment and offer them different, less desirable mortgage products (when they do not deny them outright.).

HUD has been investigating dozens of complaints against lenders who allegedly denied families mortgages because the wife was pregnant or on maternity leave. As John Trasvia, HUD’s assistant secretary for Fair Housing and Equal Opportunity noted, “Where lenders run up against the law is where they single out pregnant women for a difference in treatment based upon an assumption that either they’re not being paid on leave, they don’t have a job to go back to, or that they are unwilling to go back.” Under the law, lenders may not use parental leave as a basis for denial if the borrower demonstrates that she intends to return to work, and otherwise has enough income to qualify for the loan.

Since the government’s investigations began, several lenders, including Cornerstone Mortgage and Bank of America, have reached agreements to settle complaints of discrimination. Also, a settlement was recently reached involving a Navy veteran who said a PNC Mortgage representative in Trumbull, Connecticut, told her she had to be back at work from maternity leave to obtain a Veterans Affairs loan. According to the complaint, the woman and her husband negotiated an extended closing date for a house they were buying in Newington, so she wouldn’t have to cut her leave short. They said the seller charged them $3,000 more. Under the settlement, PNC will pay the couple $15,000. In addition, the company will review V.A., loan applications from the last two years in New York, Pennsylvania, Rhode Island, Connecticut, Vermont, New Hampshire and Maine to determine whether any denials were based on pregnancy or maternity leave.

However, it is important to note that in general, gender or sex discrimination in housing is not unique to women. Courts have recognized that the rules protect men, as well as women, in finding owners liable for denying housing to male applicants on the assumption that they were more likely to damage the property or host loud parties than female residents.