Some lenders are balking at approving loans when a new parent has temporary lost income because she is home taking care of the baby.
Even if a parent expects to be back at work in weeks, banks still may deny the mortgage. “If you are not back at work, it’s a huge problem,” says Rick Cason, owner of Integrity Mortgage, a mortgage firm in Orlando, Fla. “Banks only deal in guaranteed income these days. “
Lenders will not consider disability payments as income because they don’t last for three years.
A spokesperson for Fannie Mae said that a borrower on maternity or paternity leave could qualify for a mortgage by providing a letter from a doctor with the approved return-to-work date and a letter from the employer confirming the acceptability of the return date.
But mortgage brokers and practitioners say lenders aren’t interpreting the guidelines that way. “There is no real assurance that the new mom will come back to work after she has the baby,” says Marc Savitt, president of the Mortgage Center, a brokerage in Martinsburg, W.Va. “It’s just prudent underwriting to go ahead and approve the loan, but she has to be back before closing.”
Source: The New York Times, Tara Siegel Bernard (07/19/2010)
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