Pasadena, Calif.-based Wescom Credit Union and the U.S. Department of Housing and Urban Development (HUD) have settled a legal claim involving a married couple that alleged the credit union denied their mortgage application because the wife was on maternity leave.
The couple applied for a mortgage in September of 2015 but the credit union allegedly denied their application, requesting that the woman return to work and provide a paystub in order for the application to be approved. The couple subsequently filed a complaint with HUD, alleging the credit union had violated the Fair Housing Act’s prohibitions against sex and familial status discrimination, which include protections for persons who have or are expecting a child.
“An otherwise qualified borrower should not have their mortgage loan denied or delayed just because they’re having a baby,” Bryan Greene, HUD's general deputy assistant secretary for fair housing and equal opportunity, said in a statement. “HUD will continue to protect the rights of families by enforcing the Fair Housing Act and educating the housing industry about their responsibilities under the law.”
HUD has received nearly 150 complaints since 2010 alleging maternity leave discrimination, resulting in more than $8 million in compensation for victims.
Under the terms of the settlement, Wescom will:
- Refinance the couple’s mortgage at a lower rate
- Create a $50,000 compensation fund for applicants who were similarly denied loans or withdrew mortgage applications from the credit union during 2015
- Ensure that its lending policies regarding parental leave are compliant with the Fair Housing Act
- Provide fair lending training to employees and
- Send employees a notice regarding parental leave lending policies.
In a statement sent to Credit Union Journal, Wescom representatives said the credit union "was notified in April of 2016 that a complaint had been filed with HUD regarding a mortgage loan application. Wescom has been funding member loans for decades with the best interest of the credit union and our members in mind and in compliance with fair lending practices. Wescom has vigorously denied the allegations, however, we take complaints such as these very seriously. We have worked with HUD and the applicants on a resolution that is fair for the borrowers and meets the Fair Lending Practices requirements. In addition, to further ensure our lending policies regarding parental leave comply with the Fair Housing Act, we provide fair lending training to our employees, and we specifically advise them regarding our parental leave lending policies."
News of the settlement comes soon after Colorado’s Bellco CU made news for
