The Department of Housing and Urban Development said yesterday that it would investigate the lending practices of certain mortgage lenders to see if any prospective borrowers had been illegally denied a mortgage because they were pregnant or on short-term disability, the New York Times reported today. "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," said Shaun Donovan, the agency's secretary. Fannie Mae and Freddie Mac, the two mortgage financing giants, have always required that borrowers have enough income to pay for the loan on closing day and that lenders document that the income is likely to continue for at least three years. Since disability payments typically do not continue for that long, however, some lenders will not count it as qualifying income, several mortgage brokers have said. Some lenders may require new mothers, or others on short-term disability, to reapply for the mortgage once they return to work. If a borrower is on leave at the time of closing, the housing agency said that "lenders must document the borrower's intent to return to work, that the borrower has the right to return to work, and that the borrower qualifies for the loan taking into account any reduction of income due to their leave."
http://www.nytimes.com/2010/07/22/your-money/mortgages/22mortgage.html