Milwaukee mortgage insurer refuses to cover women on maternity leave

One company is forcing parents to make a tough decision between spending time with their newborn baby or getting a mortgage.

MGIC, a Milwaukee-based mortgage insurance company, refused to insure Carly Neals’ mortgage because she was on maternity leave, according to BankRate.com.

The Department of Justice filed a lawsuit after Neals complained to the Department of Housing and Urban Development.

"No company involved in lending should force a parent to give up her or his legal right to take time off from work to care for a new child in order to obtain a mortgage loan," Thomas E. Perez, assistant attorney general for the Justice Department’s Civil Rights Division, told BankRate.

The lawsuit claimed women had to return to work in order to receive mortgage insurance from MGIC even if there was a guaranteed job after the maternity leave. Lenders require mortgage insurance when a borrower is receiving a loan of more than 80 percent of the home’s value.

The case was settled, and MGIC set up a fund of more than $500,000 to compensate 70 people who were denied mortgage insurance. Neals received $45,000 from the fund to compensate her for leave she forfeited by returning to work.

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