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Another Mortgage Settlement Over Maternity Policies

Mortgage News

A California company has become the latest lender to settle charges that it discriminated against a loan applicant who was on maternity leave. Several similar settlements have recently been announced.

The Department of Housing and Urban Development disclosed Friday a settlement with Land Home Financial Services.

The agreement resolves allegations that the Concord, Calif.-based lender violated the Fair Housing Act.

It got into trouble when it refused to approve the loan application of a California couple because the wife was on maternity leave. A pre-approval letter was sent in response to a loan application, but Land Home required that the wife return to work after she gave birth so that she would earn a full two-week paycheck by the time escrow closed.

As a result, the borrower ended her maternity leave early and returned to work 19 days after delivering a baby.

“Refusing to approve a mortgage loan or provide refinancing because a woman is pregnant or on maternity leave violates the Fair Housing Act’s prohibitions against sex and familial status discrimination,” HUD stated.

Land Home will pay $20,000 to the borrowers as part of the settlement. In addition, it will ensure that its own underwriting policies on maternity and pregnancy leave income would be changed to conform to Fannie Mae’s and Freddie Mac’s guidelines.

HUD Assistant Secretary for Fair Housing and Equal Opportunity John Trasviña noted in the announcement that the settlement is one in a series of enforcement actions by HUD against lenders that deny women for a residential loan because they are pregnant or on maternity leave.

Recent Maternity Discrimination Settlements:

  • In June, Bank of America Corp. agreed to pay as much as $161,180 to settle charges that it discriminated against a woman on maternity leave.

  • The Department of Justice announced in May 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.

  • HUD announced in April separate settlements with Magna Bank and Home Loan Center Inc. over similar charges of discrimination against women on maternity leave.

  • A maternity discrimination settlement with Cornerstone Mortgage Co. was announced in June 2011 by HUD.

Trasviña proclaimed in today’s statement, “We will continue to pursue maternity leave discrimination until it is eliminated.”

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