November 7, 2011

HUD and Mortgage Company Settle “Maternity Leave” Loan Denial Case

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When a couple applies for a mortgage, they can’t be denied simply because they are expecting a child.  The Fair Housing Act makes it illegal to deny someone a loan because of their sex or family status, which includes having a baby.

Luxury Mortgage Corporation (LMC) allegedly denied a couple a mortgage because the woman was on maternity leave. The woman submitted a letter from her employer verifying that she was on paid leave, but LMC told her the letter wasn’t enough. After the couple filed a housing discrimination complaint with HUD, LMC admitted to no wrong doing, but agreed to pay the woman $12,000, and change its lending policy to approve mortgage loans to qualified women who are pregnant or on maternity/parental leave.

According to John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity: “Lending practices that involve denying mortgages to expectant mothers, especially when they are on paid leave and plan to return to work, violate the law.

For more information about this case or the Fair Housing Act please visit hud.gov/fairhousing.

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