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 car loans.
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 white citizens
- 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.