HUD Rule Will Use 'Disparate Impact' to Police Discrimination (Credit Union Times)

Credit Union Times
(2/11/2013 11:46:00 AM, Heather Anderson)

The U.S. Department of Housing and Urban Development has released a final rule that will apply a so-called "disparate impact" rule that will use statistical analysis to determine if discrimination and violations of the Fair Housing Act may be taking place. The rule released Friday will take effect 30 days after it is published in the Federal Register.

"Through the issuance of this rule, HUD is reaffirming its commitment to enforcing the Fair Housing Act in a consistent and uniform manner," said HUD Secretary Shaun Donovan in an agency release. "This will ensure the continued strength of one of the most important tools for exposing and ending housing discrimination."

Under disparate impact rules, a plaintiff can claim discrimination without proving intent or even the existence of the violation. Instead, statistical analysis is relied upon to reveal whether certain minority groups received the same treatment as others.

The Department of Justice has successfully used disparate impact in recent cases against Wells Fargo and Bank of America alleging discrimination. Wells Fargo settled for $175 million in July 2012 but did not admit wrongdoing. Bank of America settled its case for $335 million in December 2011 over discriminatory lending practices at Countrywide Financial during the height of the housing boom.

The CFPB said in April 2012 it will apply disparate impact when assessing if institutions it examines violate the Equal Credit Opportunity Act.

HUD is statutorily charged with the authority and responsibility for interpreting and enforcing the Fair Housing Act and has long interpreted the Act to prohibit housing practices with an unjustified discriminatory effect, if those acts actually or predictably result in a disparate impact on a group of persons, or create, increase, reinforce, or perpetuate segregated housing patterns because of race, color, religion, sex, handicap, familial status, or national origin.

Dennis Parker, director of the American Civil Liberties Union's Racial Justice Program, applauded the new rule, which he said "reaffirms the vitality of the discriminatory effects standard under the Fair Housing Act."

The rule provides clarity and consistency for individuals, businesses, and government entities subject to the Fair Housing Act. HUD said it anticipates the rule also will make it easier for individuals and organizations covered by the law to understand their responsibilities and comply with the law.