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New Federal Rule Will Make it Harder to Challenge Discrimination in the Housing Industry, Lawsuits Allege

The Washington Post

October 22, 2020

A pair of lawsuits aim to stop a HUD rule set to go into effect next week that will weaken a key fair housing tool.

Civil rights groups on Thursday filed a pair of lawsuits against the U.S. Department of Housing and Urban Development and HUD Secretary Ben Carson for weakening an Obama-era rule meant to keep lenders, landlords and insurers from discriminating.

The 2013 rule was aimed at barring the housing industry from enacting policies that, while formally race-neutral, have an adverse effect on Black and Latino Americans. These include requiring tenants to undergo a criminal-background check, prohibiting the construction of multifamily housing and using artificial intelligence to predict creditworthiness.

The rule, codifying a decades-old legal standard known as “disparate impact,” survived a 2015 Supreme Court challenge. But the Trump administration, which has consistently rolled back civil rights protections in housing and other aspects of American life, finalized a new rule in September that housing advocates say would make it harder to prove such forms of bias.

Decades of housing discrimination, including in mortgage lending, have suppressed Black homeownership and perpetuated racial economic inequality, resulting in a White-Black wealth gap of nearly 10 to 1. Applying the disparate-impact standard has helped reduce systemic inequalities, civil rights attorneys argue, by forcing lenders to originate loans based on objective criteria that do not discriminate — or face penalties.

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The new rule, housing advocates say, would allow for covert discriminatory practices by financial institutions, insurance companies and housing providers against groups protected by federal housing law: racial minorities, women, immigrants, families with children, LGBTQ people, people of faith and people with disabilities.

Under the new rule, scheduled to take effect Monday, plaintiffs bringing disparate-impact claims will have to meet a substantially higher threshold. That includes showing that a questionable policy serves no valid purpose. Previously, it was up to the defendant to come up with a justification for the policy. Plaintiffs must now also show that a specific policy or practice is the “direct cause” of any statistical disparity between outcomes for different groups.

Read New Federal Rule Will Make it Harder to Challenge Discrimination in the Housing Industry, Lawsuits Allege.