Justice Department Settles MGIC Discrimination Suit

(May 16, 2012) – The U.S. Department of Justice (DOJ) settled its first lawsuit involving the discrimination against women on maternity leave in the mortgage insurance industry.

The lawsuit was against Mortgage Guaranty Insurance Corporation (MGIC), the nation’s largest mortgage insurer, for discrimination against women on maternity leave. The lawsuit alleges that the mortgage insurer violated the Fair Housing Act, which prohibits any discrimination in housing and mortgage lending based on race, color, religion, nationality, sex, disabilities, and familial status.

This is believed to be the first such discrimination case of its kind in the country.  The lawsuit occurred when a new mother lodged a complaint with the Department of Housing and Urban Development (HUD). According to her lawsuit filed on July 5, 2011, MGIC required women who were on maternity leave to return to work before the company would insure their mortgages. (Most mortgage lenders require borrowers who owe more than 80 percent of their home’s value to take out mortgage insurance). These rules applied even to the women who totally had the right to return to work after their maternity leave. Following the investigation of the complaint, HUD issued a charge of discrimination and referred the case to the Justice Department after the parties were unable to settle their dispute. The victim of the discrimination chose to have the case heard in federal court.

The settlement was approved by the court on April 30, 2012.

The HUD complainant will receive $42,500 from the settlement fund “to address her specific pain and suffering” and compensate her for the maternity leave she gave up due to MGIC’s requirement that she return to work, according to a department release.

Seventy individuals were identified as aggrieved by the alleged discrimination between 2007 and 2010. They will share a fund that was established in the amount of $511,250. The DOJ’s lawsuit is separate from a private class action involving similar claims.  The DOJ noted that individuals compensated as part of the DOJ  settlement remain eligible to receive compensation from that class action lawsuit.  The settlement also requires MGIC to pay a $38,750 civil penalty to the United States.  Based on an extensive review of the company’s mortgage application records, the DOJ identified the aggrieved individuals.

These women had their rights compromised.  Do you think it is fair for a lending company to make a parent choose between their legal right in caring for their new baby or obtaining a mortgage loan?  This is discrimination, and they must be held accountable.  Some women didn’t think they had a choice and gave up their maternity right to be with their newborn just so they can obtain their mortgage loan. Do you think this is justice? We look forward to hearing your thoughts on this blogpost.

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