The $3.8 billion Mountain America Federal Credit Union will pay a couple $10,000 to settle allegations the credit union violated the Fair Housing Act when it denied them a mortgage, according to an announcement Thursday from the U.S. Department of Housing and Urban Development.

“The birth of a child, a joyous event for a family, should not become the basis for denying that family a home mortgage,” said Bryan Greene, HUD's general deputy assistant secretary for fair housing and equal opportunity. “HUD will continue to enforce fair housing laws to ensure that no family is denied the opportunity to buy a home because of maternity, paternity or pregnancy leave.”

The agreement indicated HUD did not complete its investigation into the complaint but both parties had agreed to settle it. The West Jordan, Utah-based credit union had maintained its decision not to make the loan based on the wife's maternity leave status flowed from their mortgage insurer's requirements.

“Respondent MACU generally denies that it discriminates against borrowers on maternity leave,” the agreement held. “Respondent asserts that any offending policies against borrowers on maternity leave are the policies of CMG Mortgage Insurance Company, a mortgage insurance company for which MACU holds delegated underwriting authority. Respondent states that if a borrower applies for a home mortgage loan while on maternity leave with Respondent, Respondent would ensure that fair lending requirements are met when underwriting and processing the home mortgage loan application.”

CMG Mortgage Insurance was purchased by the Arch Capital Group and became Arch Mortgage Insurance as of Jan. 30, 2014.

The couple alleged in October 2012 they applied for a mortgage with Mountain America only to be told they would not be eligible to receive a mortgage loan while the wife was on pregnancy or maternity leave. They alleged they were also told they could not reapply for a mortgage loan until she returned to work.

HUD said its investigation, while not finished, had found evidence “suggest[ing] Respondent's policies and procedures regarding borrowers on maternity, paternity, or pregnancy constitutes alleged discriminatory practices may have been pervasive or institutional in nature.”

In addition to paying the couple $10,000, Mountain America must also pay $15,000 for an organization that provides counseling on housing issues, include loan modification and discrimination, according to the settlement. The credit union also agreed to develop policies covering mortgage lending consistent with the Fair Housing Act and then train its staff in implementing them, the settlement said.

A spokesman for the credit union said Mountain America had not broken any laws and that the credit union had decided upon the agreement as the most efficient means of addressing the dispute. The credit union had not yet chosen a firm to send the $15,000 but expects to have selected one in a few weeks.

Arch Mortgage Insurance declined to comment on the settlement.