Bank of America will pay a $45,000 settlement after allegations that the lender discriminated against pregnant women applying for mortgage loans, according to a news release from the U.S. Department of Housing and Urban Development, or HUD.
HUD said the lender for allegedly refusing to refinance the mortgages of two couples in California and Texas because the women were on maternity leave — a violation of the Fair Housing Act. The law prohibits discrimination against sex and familial status, including people who have or are expecting a child.
One couple from San Jose, Calif. alleged that Bank of America moved back a closing date on their mortgage refinance because the woman was on maternity leave.
The second couple, from Humble, Texas, alleged that the lender refused to consider the wife’s income and denied their application for a mortgage loan because she was on maternity leave. The couple also argued that the loan officer changed his reasons for denying the loan when their real estate agent informed him that his refusal violated the law.
According to the settlement agreement, Bank of America will pay $25,000 to the California couple and $15,000 to the Texas couple. The bank will also pay $5,000 to the Texas couple’s real estate agent.
The bank agreed to change its policies, allowing applicants on parental leave to be approved for mortgage loans. Applicants would not have to first return to active work status. Bank of America will also have fair lending training for its employees, according to the news release.
Correction Nov. 5, 2013: The article originally stated that HUD sued the lender. HUD did not file a lawsuit, but it did investigate filed complaints from the two couples. The federal agency did not complete the investigation or determine a violation of law.
Here is a statement issued from Bank of America:
Bank of America has long had a strong commitment to treating all applicants fairly, including women on maternity leave. For many years, our policies have expressly allowed applicants on parental leave to be approved for a loan without returning to work.
Bank of America disagrees with the allegations in each of the complaints, and HUD has not alleged that Bank of America engaged in any wrongdoing. We elected to resolve these complaints on a voluntary basis in order to address customer service concerns and avoid further legal expenses. The policy changes that the Bank agreed to in these settlements amounted to clarifications of existing language, including some changes that required the approval of other government agencies.
Have you experienced discrimination of any kind when seeking a mortgage? I’d love to hear your story.
Business reporter Dominique Fong can be reached at (760) 778-4661,
email@example.com and on Twitter @dominiquefong.