To me, this is a no brainer. However, in light of this recent information- the lending side has started asking questions (which of course, gets me wondering what I've been missing). Anyway, in light of this: "On November 3, 2011 in a press release, the Department of Housing and Urban Development (HUD) announced that it has reached an agreement with Luxury Mortgage Corporation (LMC), a mortgage lender based in Stamford, Connecticut, to settle accusations that the lender discriminated against a woman by denying her mortgage loan because she was on maternity leave. The application was denied, even though her employer provided a letter stating that she was on paid maternity leave. The Fair Housing Act prohibits discrimination in housing sales, rentals and loans based sex or family status.

Under the settlement, LMC agreed to pay the woman $12,000."

Scenario: Male/Female couple apply for mortgage. Female is on half disability pay due to being on maternity leave. Couple does not qualify for loan based on this income (half disability pay). Loan is denied based on income, adverse action taken. Couple states that if female was at full pay, they would most likely qualify. Customer advised to re-apply at the time the female returns to full pay. Is this discriminatory? I say no because this is strictly based on income- not because the female is on maternity leave.

In the same scenario, (this is where I am concerned)-- if the female is on half disability due to maternity leave, can we require a statement from the employer that the individual is scheduled to return to work on a specific date, at full pay--and make that assumption?
I say NO. First, we shouldn't be asking--as we are doing so in regards to the female being on maternity leave. Second, what good is an assumption going to do for underwriting?

This is very black and white to me-- to others not so much and I am trying to gather my supporting back up.

Actually, if you read this case's settlement, it isn't black and white to me.

The LMC's story in this case says they were trying to verify income from her employer as their first attempt to verify income came back, "on leave". When they contacted female applicant to let her know they were attempting to verify income directly from her employer she told them to just deny her, she was going to seek financing elsewhere.

Her story is, she had a letter stating when she was going to return to work on a full time status.

In your case, I would ask, what would you do with any other borrower that was on disability? Would you require a statement from the employer that the individual is scheduled to return to work on a specific date and at full pay? If you would make this requirement of anyone else for legitimate business reasons, then its fair. A person could be on temporary disability for any number of reaons. My husband had wrist surgery and is a police officer. He couldn't hold his weapon, or work handcuffs for a period of time, so he was on disability, would you have treated him the same?

If you listen to the FRB Outlook Live webinar from Nov. 2 you will hear this discussed by Joel Armstrong of HUD.

http://www.philadelphiafed.org/bank-reso...ding-issues.cfm

In my time in the mortgage world, we had countless situations like this, disability due to injury, maternity leave, etc. We never had a problem with obtaining a letter from the employer (or in the case of injury, a doctor's letter along with employer)stating that they were out, why, when they were expected back and that they would be back to full pay at that time.

The part I would question is the "Couple states that if female was at full pay, they would most likely qualify." There had better be certainty about that, or that's where you could get in trouble. If you know the half pay, you can figure the full pay. If they still don't qualify, you have a valid reason. If they would qualify with full income, then I'd guess you'll be paying out on a lawsuit if you deny based on income.

Thanks for the feedback. Kathleen, I listened to the FRB session and it was somewhat informative...and mostly clear(?)

I'm hung up on what "conditions" are defined as. Is requiring a letter from the employer/doctor or whomever, stating the return to work date and income a "condition" to underwriting?