A national mortgage lender has agreed to pay a California couple $20,000 to settle allegations that the lender violated the Fair Housing Act by refusing to approve the couple’s mortgage application because the wife was on maternity leave.

The Fair Housing Act is enforced by the Department of Housing and Urban Development (HUD) and prohibits discrimination in the sale, rental and financing of homes based on race, color, national origin, religion, sex, familial status or disability. Refusing to approve a mortgage loan or provide refinancing because a woman is pregnant or on maternity leave violates the act’s prohibitions against sex and familial status discrimination, HUD said in an announcement of the settlement Friday.

In the settlement, Concord, Calif.-based Land Home Financial Services denied having discriminated against a Discovery Bay, Calif., couple under the Fair Housing Act or any other law.

The couple claimed they applied for a mortgage and received a loan preapproval letter from Land Home, but that in order to obtain the loan, the lender required the wife to return to work after the birth of her child and earn a full two-week paycheck by the time escrow closed on the loan. She consequently ended her maternity leave early and returned to work just 19 days after the birth of her child, HUD said.

"This settlement is part of a series of HUD enforcement actions across the country to address denials of home loans to women because they are pregnant or on maternity leave," said John Trasviña, HUD’s assistant secretary for fair housing and equal opportunity, in a statement.  "We will continue to pursue maternity leave discrimination until it is eliminated."

In addition to paying the couple $20,000, Land Home also agreed to ensure its underwriting polices conform to Fannie Mae and Freddie Mac guidelines with regard to treatment of maternity leave income.

Earlier this year, two others lenders — Irvine, Calif.-based Home Loan Center Inc. and Nashville, Tenn.-based Magna Bank — settled similar allegations of discrimination against women on maternity leave. Both lenders denied the allegations. Last year, HUD announced a settlement with Houston-based Cornerstone Mortgage Co. that created a $750,000 fund to provide payments to alleged victims of similar discrimination.

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