The U.S. Department of Housing and Urban Development recently announced a settlement agreement with the Cornerstone Mortgage Company, a Houston-based national mortgage lender that HUD had accused of violating the Fair Housing Act by engaging in lending practices that discriminated against expectant mothers. 

“Pregnancy is not a basis to deny or delay a loan,” John Tresvina, HUD’s assistant secretary for fair housing and equal opportunity, said at a June 1 press conference.

HUD had investigated the claim of Dr. Elizabeth Budde, who had been denied a mortgage loan by Cornerstone while on paid maternity leave, even though she planned to return to work.

The settlement paid $15,000 compensation to Budde, and established a $750,000 victims’ fund to compensate other Cornerstone borrowers who were similarly denied loans while pregnant or on maternity leave.

Cornerstone also agreed to notify all its loan applicants from the last two years of their right to compensation, and to pay as many as 100 claimants up to $7,500 each.

Cornerstone has adopted new policies clarifying how to appropriately treat loan applications from those on maternity or parental leave — including men on parental leave.

Tresvina also announced that HUD is charging nearly a dozen additional firms, including Mortgage Guaranty Insurance Corporation (MGIC) of Milwaukee, Wis., with violating the Fair Housing Act by engaging in discrimination against mortgage applicants on maternity or parental leave.

HUD says that MGIC denied a Pennsylvania family a mortgage loan until such time as the wife returned to work from maternity leave.

HUD will be working with Fannie Mae and Freddie Mac to ensure that its lenders are in compliance with the Fair Housing Act. HUD advises those questioning a maternity-related mortgage denial to call its hotline: 800-669-9777.