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22 | TH E M R EP O RT FEATURE women, but impacts married women, too because their salaries are determined as less secure and less significant by lending institu- tions. Thus, the working wife's income may not be adequately underwritten in consideration of the loan terms and as a result, the couple may be offered a loan with less favorable terms than if the wife's income was underwritten on par with her husband. Blurred Lines: Intentional vs. Unintentional Discrimination I n assessing discriminatory practices by mortgage lenders, it becomes apparent that there are several different practices and stages of assessment that result in intentional and unin- tentional discrimination. Common intentional discrimi- natory lending practices include: • Lenders refusing to provide mortgages to pregnant women • Requiring women to return to work before the mortgage closing • Forcing inquiries about family planning • Demanding maternity contracts (agreements that require a set work return dates for women on maternity leave that require both physician and employer approval) in order to receive specific lending terms Such behavior by lending institutions is illegal, but there have been several instances of intention- al discrimination in recent years. According to the Credit Union Times, in March 2017, the Denver Metro Fair Housing Center al- leged that Bellco Credit Union discriminated against women by denying them mortgages because they were on maternity leave at the time of submitting their applications. The allegations included that Bellco also required women to return to work for a minimum of 30 days before the lending institution would even consider and begin review of their mortgage application. Clearly such blatant discriminatory lending practices are prohibited pursuant to government regulations. This type of discrimination is not new. The Credit Union Times reported that in 2014, Mountain America Credit Union (MACU) settled a discrimination case against prospective borrowers on maternity leave. It appears that an investigation conducted by HUD found proof that MACU was il - legally basing its lending decisions and mortgage terms on maternity leave, paternity leave, or preg- nancy status. The HUD analysis stated that these practices were discriminatory, "pervasive," and "institutional" in nature. Women are also confronted with unintentional discrimination when financial institutions include judgements about women's ability to repay loans. This occurs when the underwriting includes pay inequities and fears that women will not return to work follow - ing pregnancy-and family-related leaves, despite such factors clearly violating anti-discriminatory pro- hibitions by HUD and the FHA. A New Way Forward C ourts are increasingly taking action in various instances to prevent discrimination against women, especially pregnant women. According to a HUD press release published in May 2017, dating back to 2001, HUD has received almost 150 com - plaints alleging maternity leave discrimination against mortgage lenders across the country. HUD has also obtained over $8 mil - lion in settlement compensation for borrowers in suits involv- ing maternity discrimination by mortgage lenders. The Credit Union Times reported in April 2017 that the U.S. Justice Department is actively pursuing legal action against lenders who discriminate against women on maternity leave when they submit their mortgage applications. The Justice Depart- ment reported on November 1, 2017, that it has settled many cases involving mortgage discrimina- tion against women and imposed financial sanctions against several large lending institutions, includ- ing Bank of America, PNC Mortgage, Wells Fargo, Citizens Bank, and Cornerstone Mortgage Company. Lenders are also likely to face increased litigation in the future for any form of discriminatory lending practices. Pursuant to the May 1, 2017 United States Supreme Court decision in Bank of America v. City of Miami, municipalities have standing to pursue actions against lenders for any financial impact suffered by a municipality caused by biased mortgage practices. Therefore, with the financial resources of municipalities and the several studies presently being conducted on discriminatory mortgages, it is likely that there will be an increase in individual lawsuits re - lated to race, gender, and marital status against lenders. How can this pattern of dis- crimination by lenders change? In an article on discriminatory practices in mortgage lending in February 2017, Dr. Rick Roque, founder of Menlo Company, suggests an overhaul in the Educational Management System (EMS) for mortgage lenders. "Educational systems organized and implemented across process - ing and underwriting teams to effectively address such blatant violations of Fair Lending are criti- cal to addressing this issue. The challenge is uniformity within a distributed retail mortgage lending environment where underwriters and processors reside in offices across the United States, common - ly trained to detect when levels of scrutiny are applied to applications that violate Fair Lending guide- lines," said Dr. Roque. According to Dr. Roque, EMS systems implemented across an organiza- tion with regular reviews test cases and updates for appropriate staff on the evolution of fair lend- ing regulations and enforcement actions that take place are critical to both protecting consumers and lenders from violating regulatory guidelines. Consumer advocates recom - mend that the Consumer Financial Protections Bureau require ad- ditional disclosures about credit scores and other lending factors. Others are of the opinion that integrating women into the loan origination process by hiring more women underwriters and loan originators will help alleviate dis - criminatory lending practices. An additional resolution is for lenders to have a more process-driven, gender-neutral review process to avoid the possibility for gender- based discrimination. Finally, there are those that suggest the use of an unbiased mortgage algorithm or another form of artificial intelli - gence will remove potential biases and discriminatory tendencies from the mortgage origination process. Regardless of the process implemented, it is clear that lenders need to look at their processes and data and make changes to assure they are not discriminating against the borrower because she checks the box "Female" as opposed to "Male." DEBBIE HOFFMAN is Co-Founder of Symmetry Blockchain Advisors where she works with clients in their blockchain development and initial coin offerings utilizing her expertise in law, finance, blockchain, cryptocurrency, and technology innovation. "Women are also confronted with unintentional discrimination when financial institutions include judgements about women's ability to repay loans. "