Wells Fargo, the nation’s largest provider of residential home loans, has agreed to settle in a $5 million lawsuit that alleges bank officers discriminated against pregnant women and new mothers who were out on maternity leave. Six families stated that Wells Fargo loan officers made discriminatory comments to them during mortgage application proceedings. The claim also accused the bank of making loans unavailable to pregnant women and even forcing mothers to end their maternity leave before finalizing loans.
One of the six complaints involved a real estate agent who stated he lost commissions due to discrimination against one of his clients. Complaints filed with the Department of Housing and Urban Development (HUD) states that a woman was denied a mortgage despite several letters from her employer confirming she intended to return to work.
Another incident states that comments were made to an applicant that most women on maternity leave often do not return to work and often jeopardize their ability to repay their loans. Email evidence presented in court showed the officers exact words, “most moms do not return to work after the birth of their little ones.”
Since 2010 HUD has received several complaints involving maternity leave discrimination practices. The bank is scheduled to pay six families in the initial case $165,000. So far 40 families have settled in a $1.5 million payout and HUD says there are an additional 190 discrimination cases in which 175 could classify under the lawsuit.
Wells Fargo will set aside an additional $3.5 million for these families. In total, Wells Fargo is required to create a fund of at least $5 million to cover the lawsuit settlement of all affected applications. Despite the settlement, Wells Fargo does not admit any wrongdoing and HUD will drop all allegations of discriminatory practices against the bank.
In total 250 claimants could receive an average of $20,000 each from the bank. According to Time, if the courts rule in favor of more than 175 claimants the $5 million will prorate the claimants and the bank will have to increase funds to cover the additional cases.
Wells Fargo states that the bank’s underwriting standards are constitutional. A bank spokesperson stated that the their practices do not require applicants on maternity leave to return to work before being approved for loans. Wells Fargo will change its underwriting policies to ensure they are not discriminatory as part of the settlement agreement.
In spite of the bank’s statements, lawyers say that the lender violated the Fair Housing Act which makes it illegal to discriminate on race, color and national origin, sex, disability or familial status. The states involved in the settlement included Nevada, Nebraska, Texas, Arizona, and California.
As part of the settlement, the lender also agreed to implement temporary leave guidelines in the settlement. Wells Fargo will also provide loan officers and staff with training on how to implement these new policies. Even though the bank stated that there were not violations, Wells Fargo decided to settle the lawsuit for $5 million to avoid a lengthy trial. According to DS News, HUD also stated that Wells Fargo did not violate any policies of the Fair Housing Act.
By Carolette Wright