Justice Dept. obtains settlement with mortgage broker

By Michael P. Tremoglie | May 1, 2012


WASHINGTON (Legal Newsline) - The Department of Justice announced April it settled its lawsuit against the Mortgage Guaranty Insurance Corporation for violation of the Fair Housing Act.

The DOJ claimed the company was discriminating against women on maternity leave. It is DOJ's first involving discrimination against women and families in mortgage insurance.

According to the announcement, the lawsuit, filed on July 5 in the U.S. District Court for the Western District of Pennsylvania, alleged that "MGIC required women on maternity leave to return to work before the company would insure their mortgages even for women who had a guaranteed right to return to work after the leave."

Most mortgage lenders require mortgage insurance when an applicant borrows more than 80 percent of the home's appraisal value.

The settlement was approved by the court and establishes a $511,250 fund to compensate 70 individuals identified by the government as aggrieved by the alleged discriminatory treatment between 2007 and 2010. There is also a $38,750 civil penalty.

"No company involved in lending should force a parent to give up her or his legal right to take time off from work to care for a new child in order to obtain a mortgage loan," said Thomas E. Perez, Assistant Attorney General for the Justice Department's Civil Rights Division.

"Today's settlement, coming at the close of fair housing month, protects that important right and clearly demonstrates the department will not hesitate to take action against companies who discriminate against women and families."

The lawsuit was the result of a complaint filed with the U.S. Department of Housing and Urban Development by a Wexford, Pa., loan applicant. HUD issued a charge of discrimination after its investigation. The case was referred to the DOJ after the parties were unable to settle their dispute and the complainant elected to have the case heard in federal court.

The HUD complainant will receive $42,500 from the settlement fund to address her specific pain and suffering and compensate her for leave that she forfeited in response to MGIC's requirement that she return to work.

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