DENVER – Greenwood Village-based home loan lender Bellco Credit Union faces accusations it broke federal fair housing laws by not giving mortgage loans to women while they were on or about to go on maternity leave.
Bellco Credit Union was sued by the Denver Metro Fair Housing Center in March in U.S. District Court of Colorado for allegedly discriminating against people based on their sex and familial status, the suit says. It was assigned earlier this month to a judge, and a scheduling conference in the case is set for May 26.
According to the suit, Bellco has continued to deny mortgage loans to women who are either on or facing impending maternity leave until the women return to work for at least 30 days, which DMFHC says is a direct violation of both state and federal fair housing laws, as well as underlying rules for loans issued by Fannie Mae .
Bellco has more than 20 branches across Colorado.
Over a period of several months last year, DMFHC used five women to test Bellco’s rules by applying for mortgage loans either while they were already on maternity leave, or by saying they were about to go on it.
The women were all white in order to control the test, the suit says, and all had credit scores in the mid-700s, household incomes with two earners and money in their savings. Two of the women were not on our about to go on maternity leave so as to control the test, the suit says.
In all three cases in which the women said they were on or about to go on maternity leave, loan representatives from Bellco told the women they would have to return to work and provide one month’s worth of pay stubs in order to close on a home, despite some of them having alternate incomes from their husbands and, in one case, $72,000 in savings, according to the suit.
In one case, one of the Belco workers “unequivocally communicated that women on maternity leave must return to work as a threshold condition to potentially qualify for a home mortgage loan from Bellco,” according to the suit.
But the U.S. Department of Housing and Urban Development (HUD) has issued numerous guidance memos over the past seven years showing that women do have the right to obtain a mortgage loan while on maternity leave.
From 2010 to 2014, HUD received approximately 190 complaints regarding home loans and pregnancy or parental leave, around 40 of which were settled by the end of 2014, according to the suit.
When HUD settled with Houston-based lender Cornerstone Mortgage Company in 2011, an assistant secretary for HUD said that explicitly.
“Pregnancy is not a basis to deny or delay a loan. It’s just that simple,” HUD Assistant Secretary for Fair Housing and Equal Opportunity John Trasvina said at the time. “Mortgage professionals may verify income and other resources and have eligibility standards, but they may not single out women on maternity leave to deny or delay loans that they are otherwise eligible for.”
Under the federal Fair Housing Act , people seeking home mortgage loans are protected from being discriminated against based on their sex or familial status (including pregnancy) if they can “demonstrate that she intends to return to work and can otherwise continue to meet the income requirements to qualify for the loan.”
And in 2014, HUD said that “borrowers scheduled to be on leave at the time the first mortgage payment is due may rely upon any combination of income received during leave or liquid assets not otherwise required for the loan to meet the underwriting standards,” according to the suit.
The test that DMFHC undertook met all the return-to-work requirements and minimum loan requirements necessary under law, according to the suit.
Just last July, Citizens Bank settled with HUD over accusations similar to those levied now against Bellco. And Fannie Mae, which underwrites guidance for Bellco, said in 2013 that “a lender should consider a borrower’s income while on leave” and in some cases in which the family leave payment is less than a woman’s normal income, that a lender “should take into account the borrower’s savings as available to supplement the borrower’s income.”
“Given this public guidance from HUD and Fannie Mae, Bellco should have known that its policy is unlawful,” the suit says.
The suit asks a federal judge to enjoin, or block, Bellco from continuing its practices. DMFHC claims it has been injured because it has had to “divert scare time, money and resources” to investigate Bellco in order to meet its missing “of eliminating housing discrimination and promoting housing choice for all people in the Denver metropolitan area.”
“Bellco knew or should have known that its policy of denying home mortgage loans to women who are using maternity leave was unlawful and illegal,” the suit says.
It also asks the judge to award both punitive and compensatory damages for Bellco’s alleged violations of the Fair Housing Act and Colorado Fair Housing Act, as well as attorneys’ fees and other reasonable costs.
“The denial of home mortgage loans to women who are otherwise credit worthy because they on maternity leave is not only unlawful, it severely limits women and families with children the ability to purchase or refinance a home and all the benefits that come with homeownership,” said DMFHC Executive Director Arturo Alvarado.
Bellco issued a statement Monday in response to the lawsuit saying the lawsuit has no merit:
"For more than 80 years, Bellco has served as a trusted partner to our members in this community. Bellco has never knowingly engaged in any discriminatory lending practices of any kind. In particular, Bellco’s policies forbid any kind of discrimination based on the sex or familial status of applicants, including pregnancy and maternity leave. Our attorneys are investigating the specific allegations in the complaint and will respond to them in court. But we are confident that the lawsuit has no merit."