HUD Announces Two Maternity Leave Fair Housing Agreements

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On July 1, HUD announced a conciliation agreement with a California mortgage lender, pursuant to which the lender will pay $48,000 to resolve allegations that it violated the Fair Housing Act when it denied or delayed mortgage loans to women because they were on maternity leave. Under the Fair Housing Act, it is unlawful to discriminate in the terms, conditions, or privileges associated with the sale of a dwelling on the basis of sex, including denying a mortgage loan or mortgage insurance because a woman is pregnant or on family leave. After a married couple complained to HUD that the lender denied their refinancing application because the wife was on maternity leave, HUD commenced an investigation that revealed the lender also allegedly denied four other applicants who were on maternity leave, or delayed their applications until after the women returned to work. The agreement requires the company to pay $20,000 to the couple that filed the complaint, and $7,000 to each of the other four applicants identified by HUD. The company no longer originates mortgages, but agreed to provide annual fair lending training to employees and management staff should it resume its mortgage operation. In a similar action last month, HUD required a Utah credit union to pay $25,000 to resolve allegations that the credit union discriminated against prospective borrowers on maternity leave. The HUD investigation was initiated after a married couple claimed their mortgage loan application was wrongly denied because the wife was on maternity leave. The credit union asserted that its mortgage insurer’s guidelines for calculating income for women on maternity leave allowed regular pay to be considered only if the women returned to work before the loan closed. Although the complainants previously resolved their claims, the credit union agreed to pay $10,000 to an allegedly affected borrower identified during HUD’s investigation, and $15,000 to a qualified organization to help educate the public about fair lending requirements and obligations, including the rights of borrowers on maternity, paternity, pregnancy, or parental leave at the time of an application for a home mortgage loan. The credit union also agreed to adopt an FHA-compliant policy with regard to calculation and treatment of maternity, paternity, and pregnancy leave income, and to identify when employment income may be used based upon the timing of a scheduled return to work date.

Topics:  Fair Housing, Fair Housing Act, HUD, Maternity Leave, Mortgages

Published In: Civil Rights Updates, Consumer Protection Updates, Finance & Banking Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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