Disparate impact is a longstanding legal tool to fight discrimination and ensure equal housing opportunity under the Fair Housing Act. It requires banks, landlords, and other housing providers to choose policies that apply fairly to all people. Some policies that seem neutral in theory can unfairly exclude certain groups of people or segregate particular communities in practice. This protection allows us to identify and prevent harmful, inequitable, and unjustified policies, thereby ensuring that everyone can be treated fairly.
In a disparate impact case, a person can challenge unjustified policies or practices that disproportionately harm people protected by the Fair Housing Act. Courts have allowed disparate impact claims for over 45 years. Use of disparate impact was affirmed by the Supreme Court in a 2015 ruling in Texas Dept. of Housing & Community Affairs v. Inclusive Communities Project.
The disparate impact tool helps make housing accessible for families with children, women, LGBTQ people, people with disabilities, people of faith, and communities of color. It has played a critical role in advancing civil rights and equal opportunity and addressing the segregation that still persists in America. Disparate impact is used to address disparities in rental practices, lending, property insurance, zoning, and other areas. But its impact extends far beyond housing. Gutting this protection under the Fair Housing Act is part of the Trump administration’s broad-based attack on using disparate impact to address discrimination in other areas, including education, employment, healthcare, the environment, transportation, and the criminal justice system. We must fight any efforts to take away the rights that we all share and hold dear.
Yes. In fact, more than 4 million instances of housing discrimination occur each year, and the vast majority are unreported. When Americans are denied equal access to housing, it reduces the availability of good jobs, quality education, and a clean and healthy environment, all of which are central to the American Dream.
The Fair Housing Act prohibits discrimination on the basis of race, color, national origin, gender, religion, disability, and familial status. Congress passed the Fair Housing Act with broad bipartisan support one week after the assassination of Dr. Martin Luther King Jr. in 1968. It remains one of the most critical civil rights laws for advancing racial and other forms of equality.
HUD has adopted a final rule to that will undermine the agency’s ability to enforce the longstanding legal tool known as disparate impact under the Fair Housing Act. This is one of the Trump administration’s most extreme moves to dismantle anti-discrimination laws. This rule would allow financial institutions, insurance companies, and housing providers to engage in covert discriminatory practices by dramatically weakening disparate impact liability. This would effectively destroy a 45-year-old protection against housing discrimination and would pave the way for widespread harm to millions of people across the country while businesses pad their profit margins. Specifically, the rule provides:
- Overwhelming obstacles to prove discrimination: Victims of discrimination will face a drastically higher burden to prove a disparate impact claim under the Fair Housing Act, making it virtually impossible to succeed when filing a complaint with HUD.
- Profits above all else: The rule suggests that a policy that is profitable could be immune from challenge for its discriminatory impact—with the burden on discrimination victims to show that a company can make at least as much money without discriminating.
- Brand New Immunity for Certain Practices: HUD’s new rule provides special defenses that exempt business policies that are “predictive,” and cover a broad swath of practices including but not limited to those that rely on algorithmic models—such as credit scoring, pricing, marketing, and automated underwriting systems. It explicitly protects policies even if lenders know and rely on evidence that they exclude people of color or other groups protected by the Fair Housing Act. This will encourage lenders to adopt and maintain algorithms and other covertly discriminatory practices even if the lenders know they have a discriminatory effect.
- Perpetuates Systemic Discrimination: The disparate impact tool helps to eliminate the vestiges of segregation and discrimination. HUD’s rule could prevent victims of discrimination from holding companies accountable for policies that perpetuate systemic discrimination.
If the Trump administration’s elimination of the disparate impact protection is allowed to stand, millions of our families, friends, neighbors, and communities could be harmed:
- A landlord could evict victims of domestic violence based on common leases that hold all tenants, even victims, responsible for crimes in their homes. This would place women — the primary victims of domestic abuse — and their children at risk of homelessness and further violence.
- A landlord could exclude applicants who don’t hold full-time jobs. This action would bar people with disabilities or seniors who may not work full-time but can still afford an apartment.
- A bank could charge excessive fees or rates to certain groups who seek home mortgage loans. Given these barriers, people of color or people with disabilities would be forced to take on risky or costly loans — or not have access to financing at all.
- An apartment building could restrict occupancy to one person per bedroom. Families with children would be barred from renting or would be forced to rent more expensive multi-bedroom apartments.
- An insurance company could refuse to insure homes under a certain dollar value. In many communities, this would exclude homes in neighborhoods of color from quality insurance and would prevent homeowners in those areas from fully protecting their homes from damage due to fire, hurricanes, or other disasters.
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