Pregnant for the third time, Carly Neals made plans in 2010 to immerse herself in motherhood for a few months.
Part of her financial plan was to refinance the mortgage on her Pine home -- something that should have been painless for Ms. Neals, an attorney and wealth adviser whose employer provided paid maternity leave.
Instead, she spent her leave dealing with paperwork demands and rejections from Mortgage Guaranty Insurance Corp., the Milwaukee-based firm picked by the lender to back the loan.
"I spent the entire time trying to get this loan closed," Ms. Neals said. "They were insisting that I couldn't unless I physically went back to work."
Ms. Neals is married but was the sole applicant for her mortgage.
Her resulting two-year legal struggle ended Thursday, when U.S. Magistrate Judge Robert Mitchell approved a class-action settlement that will result in payments that could reach $500,000 to 20 women who encountered similar problems with Mortgage Guaranty during pregnancy or maternity leave. That follows a May settlement of a related case brought by the Department of Justice, in which Mortgage Guaranty agreed to pay as much as $515,000 to 70 such women, including Ms. Neals.
"It's extremely significant," said Shanna L. Smith, president and CEO of the National Fair Housing Alliance, which wasn't involved in Ms. Neals' case but has aided women in similar cases. "There are couples who are having children, and single female heads of housing who are having children, and they must be able to secure mortgage loans when they are on maternity leave."
Mortgage Guaranty argued unsuccessfully in court pleadings that it had tried to finalize the loan, but Ms. Neals nixed it. Judge Mitchell in a 2011 opinion didn't buy that, finding that a push to close the loan on the final day of her maternity leave, which fell apart due to flawed paperwork, didn't invalidate her claims under the Fair Housing Act.
Ms. Neals, 34, said she could have just closed the loan after returning to work, but sued because she was "driven by what they took away from me.
"I felt like I had worked so hard to orchestrate a really good maternity leave where I could spend time with my baby and have peace of mind," she said. "There's just nothing like being at home with a newborn baby. And they just took that away from me."
She complained to the Department of Housing and Urban Development. She hired civil rights attorney Adrian Roe, who teamed with Michael Simon in a complicated two-year court fight.
The Justice Department and U.S. Attorney David Hickton's office filed a separate lawsuit based on the same allegations.
"As part of the settlement, MGIC did not admit fault," Dan Stilwell, Mortgage Guaranty vice president and chief compliance officer, wrote Thursday in response to questions. "However, the Company did review and clarify its underwriting guidelines to help make sure that insurance applications are processed as we always intended."
Still, Mortgage Guaranty is paying as much as $1 million to the women involved in the two settlements, plus $337,500 to Ms. Neals' attorneys and $38,750 to the federal government.
The case has "raised awareness of these continued issues of discrimination still very present in our country," said Heather Arnet, CEO of the Women and Girls Foundation, based in Pittsburgh. "Without government-paid maternity leave, we continue to see women subjected to economic discrimination in this country."
The women covered in the class-action lawsuit could get from $3,750 to $42,500, depending on an independent administrator's evaluation of the extent to which Mortgage Guaranty's policies affected their maternity leaves.
Ms. Neals said she's cautiously optimistic that the company is no longer considering maternity status in its mortgage insurance decisions.
Mr. Roe said that to him, the issue was simple: "Why would she need to be back at work in order to close the loan?"
Companies have never tried to make a business case for withholding loans from pregnant women, said Ms. Smith. That's because there's no reason to believe that new parents are bad risks.
"In this situation, is a single mom going to [sign a loan and then] say, well, I have no place for me and my child to live?" she asked. "Is a couple going to say, oh, we're going to live here for three months, and then we won't be able to make our mortgage payments?"
Despite the lack of justification, the practice of factoring maternity leave into mortgage decisions has been hard to stamp out, said Ms. Smith. She said lawyers and advocates have been fighting mortgage firms on the issue since 1998, when a Toledo couple sued Countrywide Home Loans. That case took a decade to settle.
Rich Lord: firstname.lastname@example.org or 412-263-1542.