Time off for baby costs mom a mortgage | Real Estate | Chron.com - Houston Chronicle

Time off for baby costs mom a mortgage | Real Estate | Chron.com - Houston Chronicle
Lender rethinks mortgage policy
By PURVA PATEL
HOUSTON CHRONICLE
June 2, 2011, 12:23AM
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Cornerstone Mortgage has agreed to settle a federal complaint that it discriminated against home loan applicants on maternity leave, the Department of Housing and Urban Development announced Wednesday.
The Houston-based lender agreed to pay one applicant $15,000 and set aside a $750,000 fund for others who may have similar claims against the company. The lender also agreed to adopt a clearer policy against discrimination and to notify potential claimants about the fund.
HUD brought the complaint under the Fair Housing Act and alleged that Cornerstone discriminated against women on maternity leave. The Fair Housing Act prohibits housing discrimination in sales, rental and lending based on a person's race, sex or family.
Cornerstone, which does business in 32 states, denies it has discriminated in violation of the act, according to the settlement. The company could not be reached for comment.
HUD began the investigation after the New York Times reported that Cornerstone approved a mortgage for Washington state resident Dr. Elizabeth Budde, then withdrew the approval upon learning she was on maternity leave. The lender told Budde it could not qualify her for a loan based on income while she was on leave, according to the complaint.
She eventually did get the mortgage after providing a letter from her employer that she was getting full salary while on leave, the Times said.
HUD Assistant Secretary John Trasviña said at a news conference Wednesday that other mortgage companies also have been accused of discrimination against women on maternity leave.
"We do believe it is a nationwide matter, so we expect more people to come forward," Trasviña said, adding that many borrowers don't know such behavior is illegal.
In addition to the Cornerstone settlement, the federal agency said Wednesday that it is citing Mortgage Guaranty Insurance Corp. of Milwaukee, alleging it denied a Pennsylvania family an application for mortgage insurance unless the wife returned to work from maternity leave.
Katie Monfre, a spokeswoman for MGIC, said the company does not comment on pending litigation.
purva.patel@chron.com