OK to Deny Morgages to Pregnant Women?
"Seeking a Mortgage? Don't Get Pregnant," announced the New York Times headline Monday. In the article that followed, Tara Siegel Bernard told of the trials of mothers nearly being denied mortgages because of maternity leave. The article, writes The Atlantic's Daniel Indiviglio, was "meant to spark outrage." He's not outraged, though--instead, he says he's relieved.
Having a child is a risk from a lender's perspective, he explains. If a couple has a low income-to-mortgage ratio to begin with, a woman deciding to stay at home with her child could interfere with the couple's ability to repay a mortgage. Even if she tells the bank she plans to return to work, there's no guarantee: "having a child is a life-altering event," writes Indiviglio, and "even the best intentions can be thwarted by the unknown. What if the baby turns out to have birth defect and the family needs a full-time private nurse to care for the child?"
In other words, the lenders' behavior makes sense, both for them and for society. "Relying on people's promise to pay didn't work out so well ... over the past few years," recalls Indiviglio. "[B]anks refusing to fund more mortgages ... would have certainly left the economy in a much better state than it is in currently."