Bellco Credit Union told Credit Union Journal it is “confident” a lawsuit filed against the $3.7 billion CU “has no merit.”
“To our knowledge, no one ever applied for, nor was denied a home loan based on the call recordings from the Denver Metro Fair Housing Center,” the CU’s statement read in part.
The Greenwood Village, Colo.-based Bellco was sued by the Denver Metro Fair Housing Center, Inc., a non-profit organization, alleging the credit union discriminated against borrowers on maternity leave. According to its website, its mission is to be “the voice of fair housing in Metro Denver. DMFHC works to eliminate housing discrimination and to promote housing choice for all people through education, advocacy and enforcement of fair housing law.”
The DMFHC filed an action in Colorado District Court in Denver on March 10. The complaint alleges Bellco Credit Union loan officers repeatedly refused to consider home mortgage loan applications from would-be borrowers on maternity leave, without consideration of whether the would-be borrowers were earning income during their leave or had sufficient liquid savings to compensate for any income lost during leave periods.
According to DMFHC, Bellco Credit Union loan officers told applicants that mothers must be back at work from maternity leave for at least 30 days before the CU will consider their home mortgage loan applications. DMFHC alleges one loan officer stated Bellco wanted to “make sure that you do return to work and at the same pay” and that it would not consider additional savings used as income during maternity leave because it was not “regular income.”
The DMFHC released a statement saying Bellco CU’s alleged practices are “irreconcilable” with U.S. Department of Housing and Urban Development and Fannie Mae written guidance that directs lenders to consider income an applicant is earning while on maternity leave as well as any liquid savings she can document.
“Being on maternity leave is not a basis to deny or delay a mortgage loan application,” said Arturo Alvarado, executive director for the DMFHC. “The denial of home mortgage loans to women who are otherwise credit worthy because they are on maternity leave is not only unlawful, it severely limits women and families with children the ability to purchase or refinance a home and all the benefits that come with homeownership.”
Telephonic Testing
According to the complaint, a copy of which was obtained by CU Journal, DMFHC conducted telephonic testing of several banks that operate in the Denver area to determine if any of them were discriminating against women on maternity leave who wanted to apply for a home mortgage loan. The DMFHC said it decided to test for lending discrimination against women who were using maternity leave because HUD has devoted substantial attention to this issue in recent years and because the DMFHC had learned that another local bank was engaging in such discriminatory practices.
DMFHC told the court it included Bellco in its testing initiative based on Bellco’s “size and presence” in Denver and throughout Colorado. “Bellco is a high-volume loan originator in Colorado, maintains more than 20 branches throughout the State, and engages in prominent marketing activities such as billboard advertising,” the complaint read in part.
Between May and August 2016, the DMFHC conducted five telephonic tests of Bellco to determine whether Bellco discriminated based on a would-be borrower’s maternity leave status. The DMFHC maintains an audio recording of each test. The DMFHC gave each tester a detailed profile in order for the tester to communicate information regarding her qualifications, income and creditworthiness, her husband’s income and creditworthiness, and maternity leave status.
DMFHC said each tester’s profile had a “strong” credit score in the mid-700s, a household income with two earners bringing in a stable income, and adequate savings for a down payment. In order to control for race, the DMFHC told the court it used white, female testers. For each test, the tester initiated a phone conversation with a Bellco loan officer, in which the tester expressed interest in buying a home and sought basic information about the mortgage application process, loan options, and interest rates.
According to the complaint, two of the five tests were control tests, in which the testers were not on (or about to go on) maternity leave.
DMFHC asked for a declaration that Bellco CU’s policy violates the federal Fair Housing Act and the Colorado Fair Housing Act. The Housing Center also asked for compensatory and punitive damages.
The credit union’s response:
“For more than 80 years, Bellco has served as a not-for-profit financial cooperative and a trusted partner to our members in this community. Bellco has never knowingly engaged in any discriminatory lending practices of any kind. Bellco policy forbids any kind of discrimination based on the sex or familial status of applicants, including pregnancy and maternity leave.
We believe the allegations in the suit could have been addressed between our two not-for-profit companies directly instead of through a lawsuit where valuable resources are being spent on attorneys and court costs. Our attorneys are investigating the specific allegations in the complaint and will respond to them in court, but we are confident that the lawsuit has no merit.”
According to online court records, Bellco CU was served with the complaint on March 23. The credit union’s answer is due May 4. A scheduling conference is set for May 26 before Magistrate Judge Nina Y. Wang.
