WASHINGTON, D.C. – Today, the U.S. Department of Housing and Urban Development (HUD), under Secretary Marcia Fudge’s leadership, released a proposed rule that would restore the power of the “disparate impact” standard, a crucial legal tool used to identify and eliminate discrimination.
Center for Responsible Lending Senior Policy Counsel Melissa Stegman issued the following statement:
Housing discrimination is a stain on our nation’s conscience. It unjustly robs people of their freedom to live where they choose and in turn, to access jobs, education, a healthy environment, and more.
Decades of government-backed redlining and other exclusionary practices have prevented Black, Latino, and other families of color from building intergenerational wealth on parity with white families.
Since discrimination now rarely arrives with a bright neon sign, the disparate impact standard is an essential legal tool to root it out. We commend the Administration for moving to restore a strong disparate impact standard and for recognizing how integral this rule is to advancing civil rights.
The Fair Housing Act of 1968 prohibits the use of policies that seem neutral on their face but have an unjustified discriminatory effect. This stems from a recognition that this discrimination may not be as obvious as overt discrimination but is no less invidious. Courts have permitted disparate impact claims for over 45 years.
In 2013, HUD, under President Obama, issued a strong disparate impact rule, grounded in decades of legal precedent.
In 2015, the U.S. Supreme Court affirmed the use of disparate impact under the Fair Housing Act in its ruling in Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, Inc. The Court made clear that disparate impact theory is necessary to fulfill “the Fair Housing Act’s continuing role in moving the nation toward a more integrated society.”
Late last year, President Trump’s Administration issued a final rule to decimate the disparate impact standard in housing. In addition to civil rights groups and elected officials, mortgage industry leaders – including Bank of America, Citigroup, Quicken Loans, and the National Association of Realtors – had urged the Administration to not issue the final rule, citing concern it would facilitate housing discrimination and calling for reexamination of the rule in light of the ongoing national examination of structural racism. This 2020 rule has been on hold, for now, due to a nationwide preliminary injunction issued by a federal judge.
In January of this year, President Biden issued a presidential memorandum that acknowledged the federal government’s role in creating and perpetuating discriminatory housing policies, that directed HUD to reassess the Trump-era disparate impact rule, and that was part of a wide-ranging agenda to advance racial equity. Today’s proposed rule would restore the power of the 2013 disparate impact rule and constitutes the latest step in this racial equity agenda.
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