Correction: An earlier version of this story mischaracterized GFS Capital as a unit of Nationstar. Nationstar acquired the loan origination operations and certain assets of GFS last year but not the company itself. An editing error was to blame.
GFS Capital Holdings will pay $48,000 to settle allegations of discrimination against women on maternity leave, the Department of Housing and Urban Development said.
The Irvine, Calif., lender violated the Fair Housing Act when it denied or stalled mortgage loans to several women on maternity leave, HUD said Tuesday.
The case originated with a complaint filed in 2012 by a married couple who said GFS Capital, then known as Greenlight Financial Services, denied their application to refinance a home since the woman was on maternity leave.
The company also denied four other applicants on maternity leave, or delayed their applications until after the women returned to work, HUD said.
Under the Fair Housing Act, the department said, "It is unlawful to discriminate in the terms, conditions or privileges associated with the sale or rental of a dwelling on the basis of sex, including denying a mortgage loan or mortgage insurance because a woman is pregnant or on family leave."
To settle the allegations, GFS Capital will pay $20,000 to the couple who filed the complaint and $7,000 each to the other four applicants.
"The fact that an applicant is on maternity leave alone is not a valid basis for denying or delaying a refinance loan," said Bryan Greene, HUD's general deputy assistant secretary for fair housing and equal opportunity, in a press release. "HUD will continue to enforce fair housing laws to ensure that no otherwise qualified applicant is illegally denied the home financing they need only because they take maternity, paternity or parental leave."
GFS Capital, which sold its loan origination operations and certain assets last year to Nationstar Mortgage (NSM), did not return calls seeking comment.