​Why being pregnant may hurt your mortgage application

For parents-to-be, the months leading up the birth of a child is an exciting time, but some may face a roadblock that adds to the financial worries of expanding a family.

That's the practice of denying or delaying loan applications when a borrower is pregnant or on maternity leave. From the banks' perspective, the reasoning comes out of concern over lower income if the mother doesn't return to work, or fails to receive income during her maternity leave. But from the government's perspective, the practice is a no-no, since it violates the Fair Housing Act.

The U.S. Department of Housing and Urban Development has been settling pregnancy discrimination charges against lenders for the past few years, indicating a persistent problem in the banking industry. Last month, HUD announced a settlement with Utah's Mountain America Credit Union, which the agency says discriminated against prospective borrowers on maternity leave.

"The birth of a child, a joyous event for a family, should not become the basis for denying that family a home mortgage," Bryan Greene, HUD's general deputy assistant secretary for fair housing and equal opportunity, said in a statement. "HUD will continue to enforce fair housing laws to ensure that no family is denied the opportunity to buy a home because of maternity, paternity, or pregnancy leave."

In a statement emailed to CBS MoneyWatch, Mountain America said it was found to have not violated any laws or regulations. "Mountain America has never violated the law in either this or any other case," the company said. "Both HUD and MACU felt it best to enter into a conciliation agreement - which was then done."

According to HUD, the lender claimed its mortgage insurer's guidelines for calculating income for women on maternity leave would only consider her pay if she returned to work before the loan closed.

Lenders cracked down on borrowers who were on leave or pregnant following the real estate crash, when many banks tightened their guidelines for housing loans. But while a bank is within its rights to insist on higher credit scores for would-be borrowers, basing a loan decision on whether one or more applicant is pregnant or on leave violates the Fair Housing Act's prohibition against discriminating based on sex and familial status.

In the case of Mountain America, a married couple applied for a mortgage from the credit union, but was allegedly told their application would be put aside until the wife returned to work and started earning money, according to the Los Angeles Times.

At the heart of the issue may be some deeply held stereotypes about women, work and motherhood. While the Pregnancy Discrimination Act was passed 35 years ago, discrimination against would-be moms still persists, according to the National Women's Law Center.

After having children, most women continue to work outside the home, with 71 percent of mothers continuing their employment, according to a Pew Research Center study. While it's true that stay-at-home mothers are on the rise -- with 29 percent of all mothers remaining at home, up from 23 percent in 1999 -- so are stay-at-home fathers.

Of course, another issue that may play into lenders' discrimination against pregnant applicants is the lack of maternity leave support in America. While every other developed country offers paid maternity leave, the United States is startling meager. In fact, the U.S. and Papua New Guinea are the only countries that don't offer cash benefits to women on maternity leave. Only 12 percent of workers have access to paid leave through their employers.

Given widespread preconceptions about pregnancy and working moms, as well as the lack of support for paid maternity leave, pregnancy-related lending discrimination may not be so easy to stamp out.