HUD Launches Fair-Housing Probe

Posted by Orb Staff on July 22, 2010 No Comments
Categories : Residential Mortgage

S. Department of Housing and Urban Development (HUD) plans to launch multiple investigations on the lending practices of certain lenders to determine if they illegally denied families mortgages because the mother is pregnant or a family member is experiencing a short-term disability. The action follows a report published this week in [link=http://www.nytimes.com/2010/07/20/your-money/mortgages/20mortgage.html]The New York Times[/link] outlining the lending practices of some lenders that might possibly violate the Fair Housing Act. HUD enforces the Fair Housing Act, which prohibits discrimination in lending based on sex, familial status or disability. The department's Office of Fair Housing and Equal Opportunity will spearhead the investigations. ‘Lenders have every right to ascertain the incomes of families to determine whether they are eligible for a mortgage loan, but they have no right to use a pregnancy or a short-term disability as a cause to deny that family a mortgage they would otherwise qualify for,’ says HUD Secretary Shaun Donovan. John Travsina, HUD's assistant secretary for fair lending and equal opportunity, called the New York Times report ‘profoundly disturbing.’ ‘Lenders must not carry out due-diligence responsibilities in ways that have the practical effect of discriminating against recent or expectant mothers,’ he says. The Federal Housing Administration (FHA) requires its approved lenders to review a borrower's income to determine whether they can reasonably be expected to continue paying their mortgage for the first three years of the loan. FHA-insured lenders cannot, however, inquire about future maternity leave. HUD says it is currently reviewing Fannie Mae and Freddie Mac's underwriting guidelines to determine if they satisfy the Fair Housing Act, including income verification of persons taking parental or disability leave. SOURCE: [link=http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_advisories/2010/HUDNo.10-158]HUD

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