An investigation started three years ago into allegations of discrimination by lenders who were underwriting applications for women on maternity leave had already yielded the Department of Housing and Urban Development six settlements. No. 7 was announced Wednesday.
The latest action has PNC Mortgage reaching a conciliation agreement with HUD over allegations that it required a loan applicant who was on paid maternity leave to return to work before the loan would be approved, according to an announcement from HUD.
The applicant was a Navy veteran who sought a loan guaranteed by the Department of Veteran’s Affairs. She and her husband were trying to buy a Newington, Conn., home in July 2012.
PNC told her that she would need at least one month’s pay stubs. Her options were to end her maternity leave or wait until she returned from maternity leave before closing on the loan.
She was able to get the seller to wait until September to close, but at a cost that was $3,000 higher than if she didn’t wait.
HUD explained that refusing to approve a loan or refinance because a woman is pregnant or on maternity leave violates the Fair Housing Act’s prohibitions against sex and familial status discrimination.
A complaint was filed by the woman with HUD on Oct. 11, 2012.
PNC agreed to pay $15,000 to the couple as part of the settlement.
In addition, the Trumbull, Conn.-based company will review prior VA applications filed in the last two years in eight states to identify prospective borrowers whose applications were denied because they were pregnant or on maternity leave. The states are Maine, Vermont, Connecticut, New Hampshire, Massachusetts, Rhode Island, Pennsylvania and New York. Impacted borrowers in those states will potentially receive $7,500 each.
“PNC will also revise its Temporary Leave/Short-Term Disability Income policy if HUD finds that the policy is deficient, and will provide fair lending training to its residential mortgage loan originators, underwriters, and processors,” the HUD notice stated.
But PNC denied that it discriminated against the woman or violated the Federal Housing Act. PNC contends that is used prudent underwriting practices and complied with all legal requirements.
HUD said it started investigating lenders for maternity leave discrimination in 2010.
In November 2012, Mortgage Guaranty Insurance Corp. paid more than $1 million to settle charges of discrimination for refusing to insure attorney Carly F. Neals for a refinance transaction because she was on maternity leave. The settlement stemmed from a July 2011 lawsuit alleging Fair Housing Act violations that was filed as a result of a referral from HUD.
Land Home Financial Services agreed in September to pay $20,000 to borrowers to settle HUD charges that it discriminated against California applicant who was on maternity leave.
Bank of America Corp. agreed in June to pay up to $261,180 over alleged discrimination in transactions involving women on maternity leave.
Magna Bank agreed to pay one woman $14,085 as part of a settlement in April with HUD, while Home Loan Center reached a similar $15,000 settlement with HUD that same month.
Houston-based Cornerstone Mortgage settled with HUD in June 2011 for $765,000 charges that it discriminated against home loan applicants on maternity leave.
