WASHINGTON, D.C. – It's been reported today that the U.S. Department of Housing and Urban Development (HUD) will rescind its enforcement of the 2013 Disparate Impact rule, a standard central to the Fair Housing Act meant to ensure that all families are treated fairly when securing housing and other housing-related services such as lending and insurance. In its place, HUD has proposed a rule which guts one of the most effective tools for redressing discrimination in housing. This action severely weakens an important enforcement tool that is critical for combatting ongoing forms of discrimination and creates loopholes that will allow bias in lending to persist. This action is inconsistent with the U.S. Supreme Court’s decision in the Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, which affirmed that disparate impact is a cognizable theory under the Fair Housing Act.
Center for Responsible Lending Executive Vice President Nikitra Bailey released the following statement:
HUD is looking for a problem that does not need a fix. With the support of taxpayers’ dollars, the banking industry has rebounded since the housing crash of 2008 and reports billions of dollars in record profits every quarter. Disparate impact theory has not hurt lenders’ bottom line and has only helped create fairer lending. Furthermore, the Supreme Court of the United States upheld this longstanding protection in 2015.
Our government played a leading role in the segregation of communities by unfairly denying access to federally-insured mortgages based on race. Redlining and other exclusionary practices set up white families for success while others live with the burdens of this divestment. The effects still can be seen and felt in communities all across the nation. Disparate impact is a critical tool to counteract this legacy by requiring lenders, landlords, insurance companies, and towns to apply their policies equitably to all. HUD’s move shifts the burden of proof in cases of discrimination from the powerful to the vulnerable, undoing decades of legal precedent and diminishing opportunities for hardworking families to build and hold wealth.
Today’s racism is often disguised as laws and practices devoid of yesteryear’s blatant vitriol and aggression. Even so, this 21st Century approach subtly reproduces the same bigoted and ugly results. Unfortunately, in this moment in history, we have no shortage of both overt and subtle racism, including algorithmic bias in lending that cost families of color millions of dollars annually in extra fees.
Americans look to our leaders to steer us toward justice and fairness. By weakening an essential enforcement tool, HUD has potentially led us toward further injustice and unfairness in American society. Americans deserve ladders of opportunity with fair rules of the road. HUD must reverse course and ensure that we all live in inclusive communities with an ability to share in the nation’s prosperity.
For more information, or to arrange an interview with a CRL spokesperson on this issue, please contact Ricardo Quinto at ricardo.quinto@responsiblelending.org.