The U.S. Department of Housing and Urban Development filed suit against mortgage insurer MGIC this week, alleging the firm denied a couple's mortgage insurance application on the grounds the wife is on maternity leave. A spokesperson for MGIC said the insurer does not comment on pending litigation. HUD alleged that on July 26, 2010, MGIC sent an e-mail about the family's loan application saying,"rec'd updated bank statements along with e-mail from borrower that states she is on maternity leave … notifying her that we cannot proceed until borrower is back to work full time." HUD said the complaint is the result of multiple investigations into discriminatory mortgage lending practices. HUD is filing the complaint under the Fair Housing Act, which prohibits lending discrimination based on sex or familial status. HUD's fair housing provisions also apply to situations involving a pregnancy or children in the family, the agency said in a statement. HUD explained, "The act protects consumers from being discriminated against because a borrower is on maternity leave if she can demonstrate that she intends to return to work and can otherwise continue to meet the income requirements to qualify for the loan." The MGIC complaint comes on the heels of a settlement HUD reached with Cornerstone Mortgage Co. HUD accused the Houston-based national mortgage lender of discriminating against expectant mothers. "Pregnancy is not a basis to deny or delay a loan. It’s just that simple,” said John Trasviña, HUD assistant secretary for fair housing and equal opportunity. “Mortgage professionals may verify income and other resources and have eligibility standards but they may not single out women on maternity leave to deny or delay loans that they are otherwise eligible for.” HUD's agreement with Cornerstone stipulates that the lender will compensate the plaintiff, create a $750,000 victims fund to compensate other Cornerstone borrowers who have experienced discrimination because they were pregnant or on maternity leave. Write to Kerri Panchuk.