The U.S. Department of Housing and Urban Development (HUD) just announced that Wells Fargo Home Mortgage has agreed to a $5 Million settlement to resolve allegations that Wells Fargo discriminated against women who were pregnant, or had recently given birth, and were on maternity leave. (Click HERE for settlement agreement)
There have been a total of 190 maternity leave discrimination complaints filed with HUD against lenders in the past 4 years and those complaints have resulted in 40 settlements for a total of $1.5 million, prior to today’s settlement with Wells Fargo.
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From the HUD press release:
The Fair Housing Act makes it unlawful to discriminate in real estate related transactions, including the provision of home mortgage loans, on the bases of race, color, national origin, religion, sex, disability, or familial status.
“The settlement is significant for the six families who had the courage to file complaints, and for countless other families who will no longer fear losing out on a home simply because they are expecting a baby,” said HUD Secretary Julián Castro. “I’m committed to leveling the playing field for all families when it comes to mortgage lending. These types of settlements get us closer to ensuring that no qualified family will be singled out for discrimination.”
In today’s settlement, the lender will distribute a total of $165,000 among six affected families; create a fund with at least $3.5 million to compensate other Wells Fargo applicants who experienced discrimination because they were pregnant or on maternity leave when they applied for a loan; and pay as many as 175 claimants $20,000 each. If there are more than 175 successful claimants, Wells Fargo will replenish the fund with $1.5 million, and pay each of the next 75 claimants $20,000 each. Claimants beyond 250 will share a prorated share of $5 million. Wells Fargo will also change its underwriting guidelines when it comes to evaluating mortgage loan applications from those on maternity leave, ensuring they are not discriminatory.
This settlement resolves complaints filed by six families from across the nation – including Nevada, Nebraska, Texas, Arizona, and California. A complaint from HUD Assistant Secretary Gustavo Velasquez on behalf of other families is also part of the settlement. Each complaint alleged that Wells Fargo’s underwriting policy for its FHA-insured home mortgage loans and the implementation of its policy violated the Fair Housing Act by discriminating against women on maternity leave. The complaints included allegations that Wells Fargo discriminated in lending services in connection with home sales, by making loans unavailable based on sex and familial status; or by forcing women applicants to sacrifice their maternity leave and return to work prior to closing on their loan; and by making discriminatory statements to and against women who were pregnant or who had recently given birth. Women applicants who sacrificed their maternity leave in order to ensure that their loan closed reported emotional distress at the loss of time with their infants and complications that arose in finding emergency child care and establishing the ability to nurse.
Since 2010, HUD has focused on ending maternity leave-related lending discrimination. One of HUD’s first cases resulted in a Department of Justice settlement with Mortgage Guarantee Insurance Corporation (MGIC), the nation’s largest mortgage insurance provider, which established a $511,250 fund to compensate 70 people, and pay a $38,750 civil penalty. Other settlements include a November 2013 settlement with Bank of America for $45,000 and a 2011 settlement with Cornerstone bank for $750,000.
In addition to the monetary relief announced today, Wells Fargo agreed to implement new Temporary Leave Underwriting Guidelines and issue instructions to its staff about how to implement the guidelines. The new guidelines clarify how Wells Fargo underwriters must evaluate and process mortgage loan applications from applicants on parental leave, including maternity leave, when they apply for a loan.
Persons who believe they have experienced discrimination or believe they may be a potential claimant under the Wells Fargo compensation fund for maternity lending discrimination may contact HUD’s Office of Fair Housing and Equal Opportunity at (800) 669-9777 (voice) or (800) 927-9275 (TTY). Housing discrimination complaints may also be filed at www.hud.gov/fairhousing or by downloading HUD’s free housing discrimination mobile application, which can be accessed through Apple devices, such as the iPhone, iPad, and iPod Touch.
