Bank of America (BOA) has settled accusations by the Department of Housing and Urban Development (HUD) that one of its California branches had discriminated against a woman on maternity leave.  This is the second settlement of such a suit against a mortgage related entity in a month.

According to a statement released by HUD, BOA has agreed to pay $161,180 to settle allegations that, after offering her a loan and receiving all of the necessary documentation, it refused to finance the mortgage loan of an Irvine California woman even though she was receiving full pay and benefits while on maternity leave.  When the bank did approve her loan two months later it was at a rate 25 basis points higher than originally promised. Discriminating against a woman who is pregnant or on maternity leave is a violation of the Fair Housing Act's prohibition against sex and family status discrimination.

In May Mortgage Guaranty Insurance Corporation (MGIC), the nation's largest provider of private mortgage insurance, settled a similar complaint with HUD over its  policy that required women on maternity leave to return to work before the company would insure their mortgages even when those women had a guaranteed right to return to work.  MGIC agreed to pay a $38,750 civil penalty and to establish a $511,250 fund to compensate 70 individuals who had been refused coverage.  

"The Fair Housing Act prohibits lenders from denying home loans to women because they are pregnant or on maternity leave," said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. "Today's settlement follows HUD actions involving other lenders across the country which we will continue until maternity leave discrimination is eliminated."

A Bank of America official said: "We regret our treatment of the applicant. We take our Fair Lending responsibilities very seriously and will work with HUD to ensure our customers on maternity leave are treated appropriately during the mortgage application process."