Mortgage Denied due to Pregnancy

posted 3 years ago in The Lounge
Post # 2
2057 posts
Buzzing bee
  • Wedding: June 2014 - British Columbia

AB Bride:  Hm, thanks for sharing the article. Interesting read. I will have to ask my coworker who works in Enterprise Risk Management. I’d have to get back to you whether it’s a legitimate credit risk, based on this type of scenario.

When I was working as a teller (almost over 5 years ago), I would remember that credit is a bit tougher for non-residents to apply since a lot of their debt would have to be secured; i.e. by cash.

This is a very grey scenario. However, I would always think this, “Why would I bank with XYZ if XYZ doesn’t trust me as a customer?”

Trust-relationship between customer and lender works both ways. It’s just that the risk appetite of the lender may not be apparent to the broker.

Post # 4
7289 posts
Busy Beekeeper

I would say it wasn’t the pregnancy as such but the added expenditure that a baby brings and possibly lack of income (due to taking time off) and her residency status. Mortgages are about risk measurement. The lender has to calculate the risk associated with lending these people the money. If she wasn’t granted residency the couple could decide to move to her country and potentially skip out on the loan. 

The same thing would happen to someone with an illness, someone on limited income, someone with huge debts an someone without a job.  

The article also contradicts itself. In one parargraph it says the lender refused the loan due to her residency status and then in another the broker claims it was because of lack of income potential due to the pregnancy. Sounds like the broker f’ed up and is trying to cover his butt.


Post # 6
7289 posts
Busy Beekeeper

AB Bride:  First paragraph of one of the two articles. I can’t rememebr which one.

Edit found it in the first article ““The lender declined the file because we were using the combination of both incomes; she’s on a work visa and she has been here for four years.”

A non=permanent residents income is often not allowed to be included in credit applications.

And maybe the lender felt that they hadn’t included that or accounted for it enough in their estimates? Leaving out information in a credit application is pretty frowned upon by lenders especially if you are found out. That could also explain why they knocked back the application.   

  • This reply was modified 2 years, 6 months ago by  j_jaye.
Post # 8
9859 posts
Buzzing Beekeeper
  • Wedding: May 2014

AB Bride: I know when I used to work for a bank/lender, if you knew of impending unemployement you had to disclose it and only the percentage of your income covered by EI would be used.  I don’t remember this particular situation ever coming up – I think it’s one of those don’t ask/don’t tell things.  We don’t ask if you’re pregnant and if you don’t tell us you’re okay, but if you tell us it might be a problem.  I’m also guessing here – but the fact that she doesn’t have PR status yet probably doesn’t help their cause. 

Post # 10
1627 posts
Bumble bee
  • Wedding: September 2010

After pregnancy comes maternity leave (not always paid or paid at current income). After maternity leave some men or women choose not to re-enter the workplace. That’s a permanent income change.

Loans are based on your willingness and ability to repay. To determine your ability to repay lenders look at income and other things. So a change in your income greatly eeffects your ability to repay.

Try qualifying solely on your husband’s income.

Post # 11
188 posts
Blushing bee

I’m a banker who approves mortgages as well, and I can’t use an income unless there’s a reasonable certainty that that income will continue. It doesn’t really matter if the reduction in income is due to a pregnancy, or just moving to part time work, or even an injury…I just can’t say ‘These people have this much money to qualify’ when in a few months time it won’t be true. They can use 60% of her income because that’s what her income will be in a few months.

Post # 12
6969 posts
Busy Beekeeper
  • Wedding: August 2012

I really don’t see anything wrong with what the lender did. She’s a non-resident on a work visa, who is planning on having a major income and lifestyle change in the near future. That’s a pretty valid reason not to give someone a big loan, IMO.

Post # 14
2057 posts
Buzzing bee
  • Wedding: June 2014 - British Columbia

Lisasaurusrex:  +1

Angry broker didn’t get his way. So, he leveraged the discrimination card after being declined for other reasons.

The  broker didn’t disclose what the total-debt ratio was.. nor how much the couple was putting down-payment on the intended purchased property.

I would say, the couple would’ve been better off building a relationship with a bank for the past 4 years that they’ve been in Canada. If the bank knows their character, they would have better chance of qualifying for a loan. Still, I wouldn’t be surprised if non-Canadian residents are required to pay a downpayment higher than the standard 25% to secure a mortgage for collateral.

The five Cs of credit are:

-Character<br />-Capacity<br />-Capital<br />-Collateral<br />-Conditions


Post # 15
3623 posts
Sugar bee
  • Wedding: July 2013

I actually went through something like this– my husband and I both are dependent on the federal government being open for our paychecks and we closed the Friday before the government shutdown. We were worried that if it got delayed by a day (the IRS couldn’t find my taxes) that our mortgage would be declined because we had no income and no ability to apply for other income or unemployment. It became a mad dash at the mortgage company to make sure that we could close on Friday due to the potential loss of income that they had to report if we closed the following week.

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