BOA Settles Gender Discrimination Suit

Bank of America (BOA) has settled
accusations by the Department of Housing and Urban Development (HUD) that one
of its California branches had discriminated against a woman on maternity
leave
.  This is the second settlement of
such a suit against a mortgage related entity in a month.

According to a statement released by
HUD, BOA has agreed to pay $161,180 to settle allegations that, after offering
her a loan and receiving all of the necessary documentation, it refused to
finance the mortgage loan of an Irvine California woman even though she was
receiving full pay and benefits while on maternity leave.  When the bank did approve her loan two months
later it was at a rate 25 basis points higher than originally promised. Discriminating
against a woman who is pregnant or on maternity leave is a violation of the
Fair Housing Act’s prohibition against sex and family status discrimination.

In May Mortgage Guaranty Insurance
Corporation (MGIC), the nation’s largest provider of private mortgage
insurance, settled a similar complaint with HUD over its  policy that required women on maternity leave
to return to work before the company would insure their mortgages even when
those women had a guaranteed right to return to work.  MGIC agreed to pay a $38,750 civil penalty
and to establish a $511,250 fund to compensate 70 individuals who had been
refused coverage.  

“The
Fair Housing Act prohibits lenders from denying home loans to women because
they are pregnant or on maternity leave,” said John Trasviña, HUD Assistant
Secretary for Fair Housing and Equal Opportunity. “Today’s settlement follows
HUD actions involving other lenders across the country which we will continue
until maternity leave discrimination is eliminated.”

A Bank of America official said: “We
regret our treatment of the applicant. We take our Fair Lending
responsibilities very seriously and will work with HUD to ensure our customers
on maternity leave are treated appropriately during the mortgage application
process.”

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Mortgage Insurer Settles Suit over Maternity Leave Policy

Mortgage Guaranty Insurance Corporation (MGIC) has settled a suit with the Department of Justice arising out of a claim that it discriminated against women on maternity leave.  MGIC has agreed to compensate affected individuals and to pay civil penalties to the U.S. government.  This is the department’s first settlement involving gender discrimination and mortgage insurance which is required by most lenders when a borrower can put less than 20 percent down on the purchase of a home.

At issue is MGIC’s policy that required women on maternity leave to return to work before the company would insure their mortgages even when those women had a guaranteed right to return to work.  Maternity leave is generally for a period of six weeks to three months prior to and following the birth or adoption of a child; leave which is typically unpaid.  Only about 12 percent of employers provide paid maternity or paternity leave.

MGIC has agreed to pay a $38,750 civil penalty and to establish a $511,250 fund to compensate 70 individuals who were affected by the company’s policies as identified by a review of the companies files.  The suit was originally referred to DOJ  by the Department of Housing and Urban Development (HUD) based on a complaint from a Wexford, Pennsylvania loan applicant who did return to work, forfeiting her leave in order to close her mortgage loan.      

The settlement also requires that MGIC follow a number of detailed nondiscriminatory provisions involving the treatment of women or men who are on or have returned from leave, paid or unpaid, related to the birth, adoption, or foster care placement of a child.  MGIC has also agreed to monitor its treatment of such loan applications, to provide appropriate training for its employees, and to provide nondiscrimination notices to mortgage applicants.

“Mortgage insurance is essential in order for many people to buy a home,” said John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity. “Borrowers should not be denied mortgage insurance for the very reason they often buy a home: to provide a decent home for an expanding family. HUD will continue to work with the Justice Department to take appropriate action against insurers and lenders who violate the Fair Housing Act.”  

MGIC is the subject of a separate private class action lawsuit brought by the original HUD complainant and has entered into a preliminary settlement which remains subject to court approval and may result in additional damages being awarded to the plaintiffs. 

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Four Disbarred in Reverse Mortgage Scam

Three mortgage originators and a title agent have been permanently barred from conducting business with the federal government after they pled guilty to charges of defrauding elderly borrowers, mortgage lenders, and the Federal Housing Administration (FHA) in a reverse mortgage scam.  The four, who are serving prison terms, were charged with conspiracy to commit wire fraud in the scheme which resulted in $2.5 million in losses.

Marcos Echevarria, Louis Gendason, John Incandela were loan officers working for 1st Continental Mortgage with offices in Fort Lauderdale and Boca Rata Florida; Kimberly Mackey was a title agent and owner of Real Estate One Land Services, Inc. in Pittsburgh.  According to the government’s complaints the loan officers identified financially vulnerable elderly homeowners and pressured them to refinance their existing mortgages using FHA-insured Home Equity Conversion Mortgages (HECM), or so-called reverse mortgages.  These mortgages allow homeowners over the age of 62 to draw the equity in their homes out in a monthly stream of income with repayment deferred until the homeowner no longer resides in the home.  The three are alleged to have changed real estate appraisals to overstate equity and of negotiating fake short sales. 

Mackey was accused of fraudulently closing some loans by failing to pay off the existing mortgages and then falsifying HUD-1 settlement documents to show that the mortgages had been paid off.  The elderly victims lived in seven different states and the abuses took place between May 2009 and November 2010.

HUD’s debarment action effectively bans these individuals from conducting business with the federal government in the future.  The Court has also ordered them to make restitution.

“HUD will not tolerate those who abuse the mortgage system and target elderly borrowers for their personal gain,” said HUD Secretary Shaun Donovan.  “Reverse mortgages can help senior citizens on fixed incomes plan for the future, but it is shameful to bilk the elderly out of their life savings.”

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HUD INDEFINITELY DEBARS FOUR INDIVIDUALS FOLLOWING REVERSE MORTGAGE SCAM THAT TARGETED SENIORS

WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) today announced the indefinite debarment of three South Florida mortgage loan officers and a Pittsburgh title agent following their criminal convictions on charges they defrauded elderly borrowers, mortgage lenders and the Federal Housing Administration (FHA). Marcos Echevarria, Louis Gendason, John Incandela and Kimberly Mackey pled guilty to charges of conspiracy to commit wire fraud for their part in a $2.5 million nation-wide reverse mortgage scam. All four individuals are currently serving prison terms.