U.S. Department of Housing and Urban Development announced on Thursday a $5 million settlement with Wells Fargo Home Mortgage, resolving allegations that the lender discriminated against women who were pregnant, or had recently given birth, and were on maternity leave.

The Fair Housing Act makes it unlawful to discriminate in real estate related transactions, including the provision of home mortgage loans, on the bases of race, color, national origin, religion, sex, disability or familial status.

“The settlement is significant for the six families who had the courage to file complaints, and for countless other families who will no longer fear losing out on a home simply because they are expecting a baby,” said HUD Secretary Julián Castro.

Under the settlement, Wells Fargo (WFC) will distribute a total of $165,000 among six affected families; create a fund with at least $3.5 million to compensate other Wells Fargo applicants who experienced discrimination because they were pregnant or on maternity leave when they applied for a loan; and pay as many as 175 claimants  $20,000 each.

On top of the financial requirements, Wells Fargo will also change its underwriting guidelines when it comes to evaluating mortgage loan applications from those on maternity leave.

"We resolved these claims to avoid a lengthy legal dispute so we can continue to serve the needs of our customers. Our underwriting is consistent with longstanding fair and responsible lending practices and our policies do not require that applicants on temporary leave return to work before being approved. The agreement resolves claims related to only five loan applications from a period when Wells Fargo processed a total of approximately 3 million applications from female customers," Tom Goyda, vice president of consumer lending communications, said. 

Since 2010, HUD has received 190 maternity leave discrimination complaints, resulting in more than 40 settlements for a total of nearly $1.5 million.

Most recently, FirstBank Mortgage Partners was fined $35,000 by the U.S. Department of Housing and Urban Development to settle allegations that the lender violated the Fair Housing Act by denying a mortgage loan to a couple because one applicant was on maternity leave.