The Department of Housing and Urban Development on Thursday announced a $5 million settlement with Wells Fargo Home Mortgage, the nation’s largest provider of home mortgage loans, resolving allegations from six families from across the country that the lender discriminated against women who were pregnant or had recently given birth and were on maternity leave.
The settlement is the biggest in HUD’s campaign to end discrimination related to maternity leave. The Fair Housing Act prohibits discriminate in real-estate transactions.
Since 2010, 190 discrimination complaints related to maternity leave have been filed with HUD, resulting in more than 40 settlements for a total of nearly $1.5 million, before Thursday’s settlement.
“The settlement is significant for the six families who had the courage to file complaints, and for countless other families who will no longer fear losing out on a home simply because they are expecting a baby,” HUD Secretary Julian Castro said. “These types of settlements get us closer to ensuring that no qualified family will be singled out for discrimination.”
As part of Thursday’s settlement, the lender will distribute a total of $165,000 among six affected families; create a fund with at least $3.5 million to compensate other Wells Fargo applicants who experienced discrimination because they were pregnant or on maternity leave when they applied for a loan; and pay as many as 175 claimants $20,000 each. If there are more than 175 successful claimants, Wells Fargo will replenish the fund with $1.5 million and pay each of the next 75 claimants $20,000 each.
In a statement, Wells Fargo said: “We resolved these claims to avoid a lengthy legal dispute so we can continue to serve the needs of our customers. Our underwriting is consistent with longstanding fair and responsible lending practices and our policies do not require that applicants on temporary leave return to work before being approved. The agreement resolves claims related to only five loan applications from a period when Wells Fargo processed a total of approximately 3 million applications from female customers.”
One of the six families that filed complaints was that of a real estate agent who lost a commission because of the alleged discrimination. He and his family received part of the settlement.
Lindsay Doyal, 31, said she remembers trying to breast-feed her month-old daughter while she was on the phone with half a dozen organizations, crying, and trying to figure out what she could do about the housing discrimination she and her husband were experiencing.
Doyal and her husband, who was in the Army Reserve working on helicopters, were trying to buy a home in Jarrell, Tex., about two years ago.
She had a whole month left on her maternity leave from her job as a nurse on a labor delivery floor, she recalled. She even gave the bank several letters from her employer saying she was going to return to work. But a Wells Fargo loan officer told her in an e-mail: “moms often don’t return to work after the birth of their little ones.”
“I thought it was so patronizing and awful,” Doyal said in a telephone interview. “And I was upset because not only was I going to be forced to return to work early and miss that precious time with my daughter but because I was actually missing time with her while dealing with trying to find a solution to the discrimination.”
Doyal did go back to work early, but her day-care slot wasn’t open yet, so she had to scramble to find a babysitter within her family.
“It was just horrible,” she said. “The settlement has made me feel better. But the truth is that I did miss out on spending a significant amount of time with my daughter, and I will never regain that time. But I do hope this sends a strong message.”