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May 1, 12

NEWS / Justice Department Reaches Settlement with Nations Largest Mortgage Insurance Provider to Resolve Al

Settlement Provides Compensation to 70 Victims Identified by the Department of Justice and Establishes Fair Procedures for Treating Borrowers Taking Leave to Care for a New Child

The Department of Justice announced today that it has settled its lawsuit against the Mortgage Guaranty Insurance Corporation (MGIC) for discriminating against women on maternity leave in violation of the Fair Housing Act. This settlement is the department’s first involving discrimination against women and families in mortgage insurance.

The lawsuit, filed on July 5, 2011, in the U.S. District Court for the Western District of Pennsylvania, alleged that MGIC required women on maternity leave to return to work before the company would insure their mortgages even for women who had a guaranteed right to return to work after the leave. Most mortgage lenders require applicants seeking to borrow more than 80 percent of their home’s value to obtain mortgage insurance.

The settlement, which was approved by the court today, establishes a $511,250 fund to compensate 70 individuals whom the United States identified as aggrieved by the alleged discriminatory treatment between 2007 and 2010. The settlement also requires MGIC to pay a $38,750 civil penalty to the United States. The Department of Justice identified the aggrieved individuals based on its extensive review of MGIC’s mortgage application records. MGIC cooperated with the United States in turning over records during the course of settlement negotiations.

The settlement also requires MGIC to follow a number of detailed 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. The settlement also requires MGIC to monitor its treatment of applicants on leave to care for a new child, to train its employees on the requirements of the fair housing laws, and to provide nondiscrimination notices to mortgage applicants.

“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. “Today’s settlement, coming at the close of fair housing month, protects that important right and clearly demonstrates the department will not hesitate to take action against companies who discriminate against women and families.”

“In bringing justice to these 70 victims, this office confirms our resolve to protect the civil rights of citizens of the Western District of Pennsylvania from illegal discriminatory practices,” said David J. Hickton, U.S. Attorney of the Western District of Pennsylvania. “Discrimination in lending has profound and widespread consequences that will not be tolerated.”

“Mortgage insurance is essential in order for many people to buy a home,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “Borrowers should not be denied mortgage insurance for the very reason they often buy a home: to provide a decent home for an expanding family. HUD will continue to work with the Justice Department to take appropriate action against insurers and lenders who violate the Fair Housing Act.”

This lawsuit arose as a result of a complaint filed with the U.S. Department of Housing and Urban Development (HUD) by a Wexford, Penn., loan applicant. After investigating the complaint, HUD issued a charge of discrimination and referred the case to the Department of Justice after the parties were unable to settle their dispute and the complainant elected to have the case heard in federal court. The Department of Justice also filed the case under the attorney general’s authority to seek redress for housing discrimination that raises an issue of general public importance. The HUD complainant will receive $42,500 from the settlement fund, to address her specific pain and suffering and compensate her for leave that she forfeited in response to MGIC’s requirement that she return to work.

Individuals compensated as part of the settlement will remain eligible to receive compensation from the separate private class action lawsuit brought by the HUD complainant. MGIC has entered into a preliminary settlement of the class action lawsuit, which remains subject to court approval, allowing victims of MGIC’s alleged maternity leave discrimination to submit claims for extraordinary damages above the amount covered by the compensation provided through MGIC’s settlement with the United States.

The federal Fair Housing Act prohibits discrimination in housing and mortgage lending based on race, color, religion, national origin, sex, disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at www.usdoj.gov/crt . Individuals who believe that they may have been victims of housing or lending discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, e-mail the Justice Department at fairhousing@usdoj.gov, or contact HUD at 1-800-669-9777.


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