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Give up newborn for a loan?

By Polyana da Costa · Bankrate.com
Monday, May 7, 2012
Posted: 7 am ET

You don't have to give up spending time with your newborn in order to get a mortgage.

It may sound obvious but giant mortgage insurance company MGIC refused to insure Carly Neals' mortgage because she was on maternity leave.

Neals of Wexford, Pa. filed a complaint with the Department of Housing and Urban Development and her case resulted in a lawsuit filed by the Department of Justice.

The lawsuit, filed in the U.S. District Court, alleged that MGIC required women on maternity leave to return to work before the company would insure their mortgages even for women who had a guaranteed right to return to work after the leave.

Lenders require borrowers to obtain mortgage insurance when borrowers are getting a mortgage of more than 80 percent of their home's value.

The case was just settled. MGIC established a $511,250 fund to compensate 70 individuals who allegedly suffered this type of discrimination when trying to get a mortgage. Neals will get $45,500 from the fund to compensate for the "pain and suffering and compensate her for leave that she forfeited in response to MGIC’s requirement that she return to work," according to DOJ.

"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," says Thomas E. Perez, assistant attorney general for the Justice Department’s Civil Rights Division.

Fair enough, no?

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4 Comments
Steven
May 14, 2012 at 2:57 pm

No Government should force PRIVATE companies to give up THEIR right to require proof of income before issuing insurance. Given the nubmer of mothers that decide NOT to go back after maternity leave, the decision not to insure people until they return is IDENTICAL to not insuring people that don't have a job.

Contrary to the implication of the artile AND the lawsuit, there is NO right to BORROW money.

Rins
May 07, 2012 at 2:22 pm

I think what they are trying to prevent is financing a couple based on two incomes and then the mom deciding she wants to stay home with the baby after being able to spend so much time with it.

While it's true anyone could decide to stay home or become part time...I don't think it's unreasonable to think new moms are more of a risk in that regard.

To know for sure if this is fair or not though there needs to be some research done on the % of new moms who leave the workforce or become part time when their original plan was to go back full time.

That being said...45K for "pain and suffering" wow...pretty sure I'd glady go through that kind of "pain and suffering" (which sounds like it amounts to waiting a few months for a mortgage and going back to work a early) for 45K.