Denying a mortgage to a woman because she is on or plans to be on maternity leave is against the law, but some lenders are accused of doing just that, according to an article on the National Association of Realtors’ news website.
A couple in Southern California was denied their mortgage-refinance request last year because the woman was on maternity leave in a direct violation of equal credit and fair housing laws enacted by the federal government in the 1970s and 1980s, according to the article.
Women have faced discrimination in lending for decades, as lenders have viewed them as riskier borrowers than men. Many women don’t know that there are laws in place to protect them against such unfair or unequal housing practices. Women who are aware of these laws and have faced such discrimination have filed federal complaints and lawsuits against lenders.
One woman, Carly Fagan Barton, took her case to court and won. Barton’s mortgage insurance company, Mortgage Guaranty Insurance Corp., refused to approve a loan until she physically returned to work from her maternity leave and produced two consecutive pay stubs, even though she was earning the same amount of money while on leave, according to the article.
Barton returned to work early, but the loan process was still delayed, so she took out a home equity loan instead. The new loan still had a higher interest rate than the rate tied to a refinance, the article states.
Barton filed a maternity-leave discrimination complaint with the U.S. Department of Housing and Urban Development. The claim turned into a class-action lawsuit against the mortgage company, which Barton declined to name. The lawsuit with the mortgage insurance company dragged on for two years and ended with Mortgage Guaranty Insurance paying a $38,750 penalty and establishing a $511,250 fund to compensate victims.
Barton is not the first nor will she be the last woman to face such discrimination. Fair-housing advocates say they want to see a much larger effort and oversight from the federal government to educate both women and lenders about maternity-leave discrimination.
Read the full story here.