01 May 2012

Women on Maternity Leave Discriminated for Mortgage Insurance

Story first appeared in The Wall Street Journal.

Mortgage insurer MGIC Investment Corp. agreed to pay more than $550,000 to settle allegations that it refused to sell policies to women on maternity leave, the Justice Department said Monday.

The company faced federal allegations that it required 70 women to return to work before they could receive mortgage-insurance coverage, which allows home buyers to take out loans with down payments of less than 20%.

In a lawsuit filed last summer, the government alleged that MGIC denied the polices to those women, even though their employers had agreed to allow them to return to work. The settlement is the first Justice Department case involving discrimination against women applying for mortgage insurance, the government said.

No company involved in lending should force a parent to give up her or his legal right to take time off from work to care for a new child in order to obtain a mortgage loan.

The MGIC spokeswoman said that the company does not believe it has ever unlawfully discriminated in any systematic way against women, families or any other group but cooperated with the probe and agreed procedures to make sure that the company's insurance underwriting guidelines are interpreted consistently and followed accurately on all occasions. In addition, she said that MGIC has entered into a preliminary settlement of a separate class-action lawsuit on the discrimination case to avoid the expense and distraction of class litigation.

Of the settlement, more than $511,000 will go to a fund to compensate the affected women. About $39,000 will be paid to the government as a civil penalty.

Under the settlement, MGIC will be required to train its employees on discrimination law, and monitor how it treats applicants who are going on leave to care for a newborn child.

The settlement stemmed from a complaint filed with the Department of Housing and Urban Development by a woman from Pennsylvania. She will receive $42,500 under the settlement, a Pennsylvania Class Actions Lawyer has stated.

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