On November 3, 2011 HUD announced (HUD No. 11-261) that it reached an agreement with Luxury Mortgage Corporation (LMC), a mortgage lender based in Stamford, Connecticut, settling accusations that the lender discriminated against a woman by denying her mortgage loan because she was on maternity leave. Under the settlement, LMC agrees to pay the woman who was denied the mortgage $12,000.
The settlement is the result of a complaint that was filed by a couple who claimed LMC discriminated against them when it denied the woman a mortgage loan because she was on maternity leave. The woman alleges that even though her employer provided a letter stating that she was on paid maternity leave, LMC told her that the letter was not sufficient. The Fair Housing Act prohibits housing discrimination in sales, rental, and lending based on a person’s sex, or family status.
In addition to compensating the woman who was denied the mortgage $12,000, LMC, while admitting no violation of the law, agrees to change its lending policy to approve mortgage loans to qualified women who are pregnant or on maternity/parental leave, including leave for adoptions.
This action coupled with a recent case involving a Houston-based lender (see previous blog article) puts the spotlight on the issue of familial status discrimination. One case is an aberration, two cases is the start of a trend, more cases may justify panic.