On May 10, 2017, the U.S. Department of Housing and Urban Development (HUD) announced a settlement with a California credit union concerning allegations that the credit union denied loan approval to a married couple because one spouse was on maternity leave, in violation of the Fair Housing Act (FHA).
HUD alleged that the couple applied for a mortgage, but the credit union allegedly denied the application, and told the couple that the spouse on maternity leave would have to return to work before the credit union would approve the application. HUD became aware of the incident after the spouse filed a complaint alleging discrimination in violation of §§ 805, 804(a), and 818 of the FHA. Under the FHA, it is unlawful to discriminate in the context of the sale or rental of a dwelling on the basis of sex or familial status, which includes discrimination against pregnant women or those on parental leave.
Pursuant to the settlement agreement, the lender agreed to (1) refinance the couple’s existing mortgage at a lower interest rate, (2) create a $50,000 compensation fund for applicants who were similarly denied loans or withdrew mortgage applications as a result of similar conduct, (3) provide fair lending training to its employees; (4) ensure its lending policies regarding parental leave comply with the Fair Housing Act; and (5) send a notice to its employees regarding its parental leave lending policies.