FAMILIAL STATUS DISCRIMINATION

Between the Equal Credit Opportunity Act and the Fair Housing Act (FHA) lenders must avoid discrimination based on 11 different bases. Usually when we hear of a case of discrimination it involves race, ethnicity or sex. But recently HUD announced a settlement of a discrimination case with a mortgage lender that had engaged in familial status discrimination under the FHA by engaging in discriminatory lending practices against expectant mothers.

The FHA protects an applicant from discrimination because he or she is on maternity leave or on parental leave due to the birth or adoption of a child if he or she can demonstrate intent to return to work and can otherwise continue to meet the income requirements to qualify for the loan. Lenders also cannot inquire about future maternity leave.

Under the terms of the agreement the lender is required to:

  • Compensate one individual $15,000 based on claims she was denied a loan even though she was on paid maternity leave and planned to return to work;
  • Create a $750,000 victims’ fund to compensate others who experienced discrimination;
  • Notify all applicants during a two-year period of their right to seek compensation; and
  • Pay as many as 100 successful claimants a lump sum of $7,500 each.

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