Dozens of Pennsylvania women who were allegedly told by Mortgage Guaranty Insurance Corporation that they had to return to work from maternity leave before the firm would insure their mortgages could share in a $511,250 settlement fund, Justice Department lawyers announced Monday.
The nation's largest mortgage insurance provider reached the settlement with the Justice Department to clear all the allegations against it. The settlement also requires MGIC to pay a $38,750 civil penalty to the United States.
The government jumped into the case in western Pennsylvania after a new mother complained about the policy, and government civil rights lawyers quickly concluded that MGIC had violated a provision of the Fair Housing Act that prohibited discrimination against women. The government attorneys located a total of 70 Pennsylvania women who had dealings with MGIC and might be eligible for compensation.
"No company involved in lending should force a parent to give up her or his legal right to take time off from work to care for a new child in order to obtain a mortgage loan," said Assistant Attorney General Thomas Perez.
Carly Neals of Wexford, Pennsylvania, originally filed a complaint of discrimination with the Department of Housing and Urban Development, which eventually referred the case to the Justice Department. She will receive $42,500 in compensation for leave she forfeited in response to the insurance company's requirement.
In addition, the individuals involved in the lawsuit will also be eligible to receive money from a separate private class-action lawsuit.
Most lenders require home buyers to purchase private mortgage insurance to cover any loan in which the purchaser has put down less than 20% of equity.
Court records show that MGIC holds $172 billion in mortgage insurance purchased by a total of 1.1 million home buyers.
CNN was unable to reach the mortgage company for a response. The company had no mention of the settlement on the press release section of its website as of 9:30 p.m. ET Monday.