WASHINGTON The Department of Housing and Urban Development announced it has reached agreements to settle two Fair Housing Act complaints against CMG Mortgage Insurance Company, the nation’s largest provider of private mortgage insurance to credit unions, over coverage for a borrower on maternity leave.
CMG MI will pay $30,000, resolving allegations that it refused to insure the home mortgage loan of a married couple because the wife was on maternity leave, and that it maintained a written policy of refusing to consider the regular pay of women on maternity leave as income.
CMG MI, which provides more than half of all private mortgage insurance for credit unions, was owned till earlier this year by CUNA Mutual and PMI Mortgage Insurance until PMI sold its share to Arch Capital Group Ltd. CUNA Mutual still owns a 50% share in the venture.
CMG said in a statement, “CMG MI settled to avoid the cost and distraction of the matter. CMG MI denies the allegations underlying this matter and there was no finding by HUD, or any other entity, of any discriminatory action by CMG MI. This is not surprising as CMG MI has not discriminated against borrowers on any basis. In fact, in the settlement agreement itself, HUD confirmed CMG MI’s internal review of the matter, which did not find a single instance of discrimination.”
The Fair Housing Act makes it unlawful to discriminate in mortgage lending and residential real estate-related transactions based on race, color, national origin, religion, sex, family status or disability. These prohibitions include refusing to approve a mortgage loan or to provide mortgage insurance because a woman is pregnant or on maternity leave.“A woman’s maternity leave is not a legitimate basis for a lender to deny a mortgage loan or for an insurer to deny mortgage insurance,” said Bryan Greene, HUD Acting Assistant Secretary for Fair Housing and Equal Opportunity. “This settlement will allow families all over the country to obtain home loans without respect to their family leave status.
The Conciliation Agreements resulted from a complaint by a married couple seeking to refinance their home mortgage loan through a credit union.
The credit union allegedly denied the application because the woman was on maternity leave, citing CMG MI’s guidelines for calculating income for women on maternity leave, which allowed for regular pay to be considered only if the applicant returned to work before the loan closed.
HUD also filed a complaint against CMG MI on behalf of the public, alleging that the company’s written policies and procedures regarding borrowers on maternity, paternity, pregnancy, or parental leave were discriminatory.
Under the terms of the Conciliation Agreements, CMG MI will pay $5,000 to the couple who filed the initial complaint and $25,000 to a qualified organization to educate the public about their fair lending rights, including the rights of borrowers on maternity, paternity, pregnancy, or parental leave when applying for home mortgage loans. Additionally, CMG MI will develop new nondiscriminatory guidelines regarding calculating maternity, paternity, and pregnancy leave income, and train its employees and employees of credit unions that have underwriting responsibilities about these new guidelines.
