The Department of Justice has settled its lawsuit against the Mortgage Guaranty Insurance Corporation (MGIC) for discriminating against women on maternity leave in violation of the Fair Housing Act. This settlement is the Department’s first involving discrimination against women and families in mortgage insurance. The 2011 lawsuit, filed 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 applicants seeking to borrow more than 80% of their home’s value to obtain mortgage insurance.
The settlement, which has been approved by the court, establishes a $511,250 fund to compensate 70 individuals whom the United States identified as aggrieved by the alleged discriminatory treatment between 2007 and 2010. The settlement also requires MGIC to pay a $38,750 civil penalty to the United States. The Department of Justice identified the aggrieved individuals based on its extensive review of MGIC’s mortgage application records. It was reported that MGIC cooperated with the U.S. Government in turning over records during the course of settlement negotiations.
The settlement also requires MGIC to follow a number of detailed nondiscriminatory provisions in its future review of mortgage insurance applications involving women or men who are on, or have returned from, paid or unpaid leave related to the birth, adoption, or foster care placement of a child. The settlement requires further that MGIC must monitor its treatment of applicants on leave to care for a new child, to train its employees on the requirements of the fair housing laws, and to provide nondiscrimination notices to mortgage applicants.
This lawsuit arose as a result of a complaint filed with the U.S. Department of Housing and Urban Development by a Wexford, Pa., loan applicant. After investigating the complaint, HUD issued a charge of discrimination and referred the case to the Department of Justice after the parties were unable to settle their dispute and the complainant elected to have the case heard in federal court. The Department of Justice filed the case under the Attorney General’s authority to seek redress for housing discrimination that raises an issue of general public importance.
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. Individuals compensated as part of the settlement will remain eligible to receive compensation from the separate private class action lawsuit brought by the HUD complainant.
MGIC has entered into a preliminary settlement of the class action lawsuit, which remains subject to court approval, allowing victims of MGIC’s alleged maternity leave discrimination to submit claims for extraordinary damages above the amount covered by the compensation provided through MGIC’s settlement with the United States.
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