Alert February 19, 2013

HUD Settles Maternity Leave Discrimination Case

HUD announced that it has settled claims alleging a national bank violated the Fair Housing Act by requiring a home loan applicant on paid maternity leave to return to work before the lender would approve the application. Complainant, a borrower whose complaint prompted the investigation, was a US Navy veteran who applied for a Veterans’ Administration-guaranteed loan. The complaint alleged that complainant was forced to pay an additional $3,000 to the seller to delay the closing and thereby make use of all of her maternity leave. HUD investigated respondent’s practices for reviewing applications submitted by applicants on maternity leave and found that the bank’s requirement that applicants return to work before approving the loan violated the FHA, which prohibits discrimination in the sale, rental, or financing of housing based on familial status, among other things. The terms of the settlement require respondent to pay $15,000 to complainant, review its applications for VA-guaranteed loans within a number of states for the previous two years, and pay $7,500 to any other applicants who were subjected to similar requirements as a condition of loan approval. Respondent also agreed to revise its lending policies and provide fair lending training to loan originators, underwriters and processors.