On February 6, 2013 the Department of Housing and Urban Development (HUD) announced the settlement of a case that alleged that the lender violated the Fair Housing Act by requiring a home loan applicant on paid maternity leave to return to work before the lender would approve a home loan.
HUD’s complaint alleged that because the lender required the woman, a Navy veteran, to return to work before approving the Department of Veterans Affairs (VA)- guaranteed loan, the couple could not close on their new home until a month later than they had planned. As a result, the seller of the home allegedly required the couple to pay an additional $3,000 for the delay.
Under the Agreement, the lender will pay $15,000 to the couple and review applications for VA-guaranteed residential mortgage loans filed in the last two years in Maine, Vermont, Connecticut, New Hampshire, Massachusetts, Rhode Island, Pennsylvania, and New York to identify qualified loan seekers whose applications were denied because they were pregnant or on maternity leave. The lender will pay $7,500 each victim who is identified. The lender will also revise its Temporary Leave/Short-Term Disability Income policy if HUD finds that the policy is deficient, and will provide fair lending training to its residential mortgage loan originators, underwriters, and processors.