The ""Justice Department"":http://www.justice.gov/ settled its first lawsuit involving discrimination against women and families in the mortgage insurance industry Monday.[IMAGE]
The lawsuit was against ""Mortgage Guaranty Insurance Corporation"":http://www.mgic.com/ (MGIC), the nationÃ¢â‚¬â„¢s largest mortgage insurer, for discriminating against women on maternity leave. The lawsuit alleges that the mortgage insurer violated the Fair Housing Act, which prohibits any discrimination in housing and mortgage lending based on race, color, religion, national origin, sex, disability, and familial status.
The lawsuit was first filed on July 5, 2011 in the U.S. District Court for the Western District of Pennsylvania and alleged that MGIC would not insure mortgages for women on maternity leave and required women to return to work in order to obtain mortgage insurance.
The 70 individuals who were identified as aggrieved by the alleged discrimination between 2007 and 2010 will be compensated through a fund that was established in the amount of $511,250.[COLUMN_BREAK]
Through the settlement, MGIC must also pay a $38,750 civil penalty to the U.S. The Justice Department identified the aggrieved individuals based on a review of company's application records. MGIC cooperated with the U.S. in turning over records during the settlement negotiations.
The settlement also requires MGIC to follow nondiscriminatory provisions in its future review of mortgage insurance applications involving women or men who are on, or have returned from, paid or unpaid leave related to the birth, adoption or foster care placement of a child.
Most mortgage lenders require borrowers who owe more than 80 percent of their home's value to take out mortgage insurance.
""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,"" said Thomas E. Perez, assistant attorney general for the Justice Department's Civil Rights Division, in a statement.
This lawsuit first arose as a result of a complaint filed with HUD by a Wexford, Pennsylvania applicant. After investigating the complaint, HUD issued a charge of discrimination and referred the case to the Justice Department after the parties were unable to settle their dispute, and the plaintiff chose to have the case heard in federal court.
The HUD plaintiff will receive $42,500 from the settlement fund ""to address her specific pain and suffering"" and compensate her for maternity leave that she gave up due to MGIC's requirement that she return to work, according to a department release.
Individuals compensated through the settlement can still pursue a separate private class action lawsuit.