Bloomberg News

MGIC Discriminates Against Mothers on Paid Leave, U.S. Says

July 05, 2011

(Updates with excerpt from filing in fourth paragraph.)

July 5 (Bloomberg) -- Mortgage Guaranty Insurance Corp., the largest U.S. provider of mortgage insurance, was sued by the Justice Department for allegedly refusing to provide insurance for loans to women on paid maternity leave.

The insurer violated the U.S. Fair Housing Act by discriminating based on sex and familial status, David Hickton, the U.S. attorney in Pittsburgh, said in a complaint filed today in federal court. The lawsuit seeks a court order to stop MGIC from further discrimination and unspecified damages.

“It defies belief that, in 2011, any institution would discriminate against a mother for legally and properly taking leave after the birth of a child,” Hickton said in a statement.

Underwriters at MGIC refused to provide insurance for a mortgage for a mother of three, who was seeking to refinance a home she jointly owns with her husband in Wexford, Pennsylvania, until she returned to work full time, according to the complaint.

The woman, Carly Neals, filed a complaint with the U.S. Department of Housing and Urban Development. After an investigation, HUD found that there was reasonable cause to believe illegal discrimination had occurred, according to the complaint.

Katie Monfre, a spokeswoman for MGIC in Milwaukee, didn’t immediately return a call after regular business hours.

The case is U.S. v. Mortgage Guaranty Insurance Corp., 05- MC-02025, U.S. District Court, Western District of Pennsylvania (Pittsburgh.)

--Editors: Stephen Farr, Michael Hytha.

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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