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HUD aims to stop lenders’ discrimination

Last year the U.S. Department of Housing and Urban Development launched an investigation into the lending practices of select mortgage lenders to determine if they committed Fair Housing Act discrimination in denying mortgages to families because a woman is pregnant or about to go on a pregnancy-related leave of absence.

As a result of the investigation, HUD filed suit against national mortgage lender Cornerstone Mortgage Co. for engaging in discriminatory lending practices against expectant mothers. HUD settled the suit and held a news conference in New York City on June 1 to announce the settlement.

In addition to the Cornerstone suit, HUD has also charged Guaranty Insurance Corp. of Milwaukee and other companies with Fair Housing Act violations in loan applications to expectant mothers.

“Pregnancy is not a basis to deny or delay a loan. It’s just that simple,” said HUD Assistant Secretary for Fair Housing, John Trasvina. “Mortgage professionals may verify income and other resources and have eligibility standards but they may not single out women on maternity leave to deny or delay loans that they are otherwise eligible for.”

Trasvina

It’s not an issue home loan lending discrimination assistance agency attorneys Laurie Lambrix of the Fair Housing Enforcement Project of the Monroe County Legal Assistance and Rebecca Case-Grammatico of the Empire Justice Center have had to address, but Lambrix said that doesn’t mean it’s not going on here. Lambrix said she did not think lenders had to disclose pregnancy status on a loan application and lenders might be getting that information “based on how [pregnant applicants] are presenting.”

“If they’re denying mortgage applications to pregnant women or women who are about to go on leave even though they have verifiable income, I think that’s wrong,” Case-Grammatico said.

“It’s against human rights law in New York to discriminate based solely on a medical condition such as a pregnancy,” said New York State Division of Human Rights Deputy Commissioner for External Relations James Mulvaney.

State law mirrors the Fair Housing Act prohibition against discrimination in lending based on gender or familial status including pregnancy. However, Mulvaney said that “fear of not going back to work is not enough to issue a denial but that doesn’t give you blanket protection to not be working.”

HUD stressed that a pregnant woman must still demonstrate her intention to return to work and meet income and credit requirements to qualify for a loan.

Mulvaney said the agency “conducts investigations on behalf of HUD” and could not comment on specific cases, only the law.

As part of the settlement agreement, Cornerstone was required to adopt a HUD approved policy addressing the availability of all home loan products regardless of pregnancy status or maternity leave.

Cornerstone will also create a $750,000 victims’ fund to compensate other borrowers who allegedly experienced discrimination because they were on pregnancy or maternity leave at the time they were applying for a loan.

–          todd.etshman@nydailyrecord.com