WASHINGTON — Mountain America Credit Union agreed to pay $25,000 to settle allegations it discriminated against prospective mortgage applicants on maternity leave, the U.S. Department of Housing and Urban Development said Wednesday.
Refusing to approve a mortgage loan or provide mortgage insurance because a woman is pregnant or on family leave violates the Fair Housing Act's prohibition against sex and familial status discrimination, which includes individuals who have or are expecting a child, according to HUD.
The settlement is the result of a complaint HUD initiated after investigating the allegations of a married couple who claimed $3.8 billion-asset CU wrongly denied their mortgage loan application because the wife was on maternity leave.
"The birth of a child, a joyous event for a family, should not become the basis for denying that family a home mortgage," said Bryan Greene, HUD's general deputy assistant secretary for Fair Housing and Equal Opportunity. "HUD will continue to enforce fair housing laws to ensure that no family is denied the opportunity to buy a home because of maternity, paternity, or pregnancy leave."
The $3.8 billion-asset Mountain America said its mortgage insurer's guidelines for calculating income for women on maternity leave allowed regular pay to be considered only if the women returned to work before the loan closed.
In an e-mailed statement to Credit Union Journal on Thursday, a Mountain America spokeswoman said: "HUD received a complaint, which they acted upon and performed a full investigation; Mountain America Credit Union was found to have NOT violated any laws or regulations. Mountain America has never violated the law in either this or any other case. Both HUD and MACU felt it best to enter into a conciliation agreement — which was then done."
Under the terms of the agreement, West Jordan, Utah-based Mountain America will pay $10,000 to an affected borrower identified during HUD's investigation, and $15,000 to a qualified organization to help educate the public about fair lending requirements and obligations, including the rights of borrowers on maternity, paternity, pregnancy, or parental leave at the time of an application for a home mortgage loan.
The spokeswoman said the CU has not yet selected the organization that will receive the $15,000. "[M]ultiple organizations are currently being researched and vetted," she added. "A selection will be determined within the next few weeks."
Mountain America is also required to adopt a parental leave policy consistent with the Fair Housing Act with regard to calculation and treatment of maternity, paternity, and pregnancy leave income, and identify when employment income may be used based upon the timing of a scheduled return to work date. Mountain America will conduct training on the new policy and its application for its employees.
The married couple who brought the case to HUD's attention settled their complaint in 2013.
Mountain America is the second-largest credit union in Utah and the 34th-largest in the United States.
