S. R. and D. R., a young couple living near Philadelphia, applied for a home renovation loan from the Police and Fire Federal Credit Union (“PFFCU”) in February 2021, when S.R. was on maternity leave after the birth of their second child. Throughout that leave, she was receiving her full salary pursuant to the Family Medical Leave Act (“FMLA”) and had a firm date to return to work.
After provisionally approving their loan application, PFFCU refused to complete processing when it learned S.R. was on maternity leave and told the couple that they would have to reapply for a loan after she returned to work. PFFCU did not inquire as to the date of her expected return to work, or about the assets available during her leave; instead it refused to close her loan because of her FMLA paid leave, and said she would have to return to work and have at least two pay stubs without FMLA before PFFCU would consider the loan.
Relman Colfax filed an administrative complaint with the U.S. Department of Housing and Urban Development (“HUD”) on November 4, 2021, alleging that the couple’s treatment violated the Fair Housing Act based on familial status, which protects against housing discrimination based on pregnancy, and on disability, because the credit union treated the couple’s income as if the wife were on disability leave. S.R. and D.R. were qualified in every respect for the loan they sought from PFFCU and—in fact—secured a similar loan from another lender. They pursued the HUD complaint to vindicate their rights under the Fair Housing Act.
On March 31, 2022, the parties reached an agreement through the HUD administrative process to resolve the matter with PFFCU, require it:
- Include in its underwriting policies provisions about maternity and paternity leave as a form of short-term leave;
- Permit future borrowers on paid short term or parental leave to close loans before they return to work and to use FMLA and other short-term disability payments to qualify for loans;
- Permit future borrowers on parental leave who will not return to work before the date of their first mortgage payment to provide available supplemental resources in order to qualify for a loan;
- Train loan officers and underwriters on provisions of the settlement and on fair lending principles generally;
- Pay the couple $50,000 for damages and attorneys’ fees.
HUD will monitor compliance with the agreement for a period of 3 years.