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Maternity Settlements Pile Up

Yet another settlement is being touted by the Department of Housing and Urban Development over violations of the Fair Housing Act as a result of alleged lending discrimination against women on maternity leave.

Last month, the Department of Justice announced a $540,000 settlement with MGIC Investment Corp. The case was initiated by HUD after it found that the mortgage insurer allegedly denied coverage to Carly F. Neals because she was on maternity leave.

A month earlier, HUD announced separate settlements with Magna Bank and Home Loan Center Inc. over similar charges of discrimination against women on maternity leave, while a maternity discrimination settlement with Cornerstone Mortgage Co. was announced by HUD in June 2011.

The latest episode in alleged fair lending violations was announced Friday from the housing agency.

Bank of America Corp. has agreed to pay as much as $161,180, including $30,000 to a borrower, $16,180 to her attorney and $15,000 to the Fair Housing Council of Orange County.

In addition, BofA will create a $100,000 compensation fund that will be used to pay damages to applicants or borrowers impacted by alleged fair lending violation when BofA either denied their applications, delayed their loan approvals or subjected them to adverse loan terms because they were pregnant or on maternity leave.

The borrower tied to the settlement originally applied at a San Jose, Calif., branch of BofA for a 5 percent no-cost refinance in December 2009. But the Charlotte, N.C.-based lender suspended her application the following month because she was on maternity leave.

She allegedly was told she would have to return to work before BofA would process her application.

The borrower ultimately closed on the refinance in March 2010, but rates had risen by that time — leaving her with a 5.25 percent rate.

After telling her story to the Fair Housing Council of Orange County, a non-profit fair housing organization funded by HUD, a complaint was filed.

Fair lending cases are predominantly filed by the government and are very costly to defend, Ballard Spahr Partner Christopher J. Willis noted in a recent presentation. Willis predicts an increase in government-filed fair lending cases during the next year.

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