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Comment: HUD’s Implementation of the Fair Housing Act’s Disparate Impact Standard

October 18, 2019
Mortgage Lending
Comment Letter

The proposed rule will have a toxic effect on the mortgage lending industry. The Fair Housing Act’s disparate impact doctrine has played a critical role in making fair housing available to all, while at the same time making the lending industry better at evaluating creditworthiness. A ban on unjustified disparate impact has encouraged the lending industry to systematically scrutinize its procedures and requirements to ensure that lenders more precisely measure creditworthiness and lending practices do not have unnecessary discriminatory impact. Thus, financial products are more widely available to people and communities historically denied them. At the same time, the lending industry has been able to identify a larger number of credit-worthy borrowers, continue to evaluate risk in a less discriminatory manner, and increase its profits. Backtracking on disparate impact theory will hurt borrowers’ access to safe and affordable mortgage credit as well as hurt lenders’ bottom line. Moreover, it will perpetuate racial homeownership rate gaps and wealth gaps, especially today’s low Black homeownership rate that stands at 40.6 percent, which is lower than when the Fair Housing Act became law in 1968.