Since its implementation in 1968, the Fair Housing Act has offered many
opportunities to minority citizens who want to rent or purchase housing
property. Under the provisions of the act, it is illegal to discriminate
against potential home owners based on their race, religion, or gender.
Because of disparate impact analysis rules, potential homebuyers and renters
can currently sue insurance companies and property sellers for discrimination.
In 2015, Judge Kennedy of the U.S. Supreme Court opinioned that the disparate
impact theory “was enacted to eradicate discriminatory practices
within a sector of the Nation’s economy…recognition of disparate
impact liability under the FHA [Fair Housing Act] plays an important role
in uncovering discriminatory intent: it permits plaintiffs to counteract
unconscious prejudices and disguised animus that escape easy classification
as disparate treatment.” However, even with these protections, neighborhood
discrimination has increased, while minority home ownership rates haven’t.
In fact, disparate impact claims are usually unsuccessful because they
can be so difficult to prove.
During the Obama administration, the Consumer Financial Protection Bureau
and the Department of Justice worked together to try and enforce fair
lending laws. The goal was to use disparate impact analysis more aggressively
across all sectors and decrease overall minority discrimination. Due to
their efforts, Ally Financial INC. and Ally Bank were ordered to pay $80
million in damages to minority victims who were overcharged for their
Investigations by the Department of Justice and the Consumer Financial
Protection Bureau revealed that:
- 100,000 African American citizens were charged interests rates $300 higher
than white citizens
- 125,000 Hispanic citizens were charged interest rates $200 higher than
- 10,000 Asian citizens were charged interest rates $200 higher than white citizens
The success of this venture led to the HUD adopting the disparate impact
analysis rule in 2013. The insurance industry was livid and promptly sued
the government on the basis that homeowner’s insurance relies on
setting prices based on risk. The Obama administration did not balk under
pressure, and the insurance companies were forced to take the new disparate
impact policies into account.
The Trump Administration, however, is currently working to make it easier
for insurance companies to discriminate against minority property buyers
and renters. The Treasury Department issued a report stating that utilizing
disparate impact analysis may “impose unnecessary burdens on insurers.”
Likewise, Republican lawmakers have been pressuring the U.S. Department
of Housing and Urban Development (HUD) Secretary Ben Carson to remove
the rule entitled, “Implementation of the Fair Housing Act’s
Discriminatory Effects Standard.” In a letter, they claim the rule
is out-of-date and has a negative impact on the HUD’s affordable
housing goals. Of course, in a controversial revelation, four of the lawmakers
who signed this letter have received $13,000 from the American Insurance
Association for the 2018 election season.
While Secretary Carson claims that “government-engineered attempts
to legislate racial equality…often make matters worse,” other
critics vocally disagree. In fact, Craig Gurian, the executive director
of the Anti-Discrimination Center in New York, claims that revising this
act will make it difficult for plaintiffs to prove discrimination in fair
housing cases. For now, America can only watch as lawmakers decide the
future of the Fair Housing Act.
Schedule a Consultation
At Allen, Semelsberger & Kaelin LLP, our
San Diego real estate attorneys excel in state and federal real estate laws. Our firm has been providing
legal services to hopeful homebuyers and renters for over 35 years. Contact
our legal team today if you’re facing discrimination from landlords
or property owners.
Call Allen, Semelsberger & Kaelin LLP
at (888) 998-2031 to schedule a case evaluation.