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Van Hollen Joins Senate Democrats in Urging HUD to Reject Proposed Changes to the Fair Housing Act’s Disparate Impact Standard

November 26, 2019

WASHINGTON,
D.C.  –

U.S. Senator Chris Van Hollen (D-Md.) joined SenatorSherrod Brown (D-OH) along with forty-five senators sent a
letter
to
Department of Housing and Urban Development (HUD) Secretary Ben Carson, urging
him to reject changes proposed in the Department of Housing and Urban
Development’s (HUD) August 19, 2019
Proposed Rulemaking: HUD’s
Implementation of the Fair Housing Act’s Disparate Impact Standard
(the
Proposed Rule).
 

 

The Proposed Rule
would effectively eliminate use of the disparate impact standard for fair
housing enforcement, a key tool for rooting out and eliminating hidden
discrimination.  The Proposed Rule simultaneously raises the bar for
victims of discrimination to bring complaints under the Fair Housing Act, while
carving out new avenues for financial institutions, governments, and other
housing market participants to continue discriminatory practices. With this
Proposed Rule, the Administration is putting a heavy thumb on the scale for
those engaged in discriminatory practices rather than defending the rights of
people seeking fair and equal access to housing.

 

“We
are deeply troubled by the direction this Administration is heading in relation
to Fair Lending and Fair Housing protections.”
the
senators wrote.
  “Housing is the foundation of opportunity for
individuals, families, neighborhoods, and society. Preventing housing
discrimination – including subtle, hidden discrimination – is central to the
mission Congress charged HUD to carry out.  We urge you to uphold this
mission, reject the changes in the Proposed Rule, and preserve the existing
rule.”

 

The
full text of the letter can be found 
HERE
 and
below:

 

 

November
25, 2019

 

The Honorable
Benjamin S. Carson, Sr.

Secretary

United States
Department of Housing and Urban Development

451 Seventh Street
S.W.

Washington, DC
20410

 

Dear Secretary
Carson:

 

Specifically, we are writing to
urge you to reject changes proposed in the Department of Housing and Urban
Development’s (HUD) August 19, 2019
Proposed Rulemaking: HUD’s
Implementation of the Fair Housing Act’s Disparate Impact Standard
(the
Proposed Rule).

 

Congress enacted the Fair Housing
Act in the wake of the 1968 assassination of Dr. Martin Luther King, Jr. 
This landmark legislation struck down discriminatory practices like redlining,
which had excluded racial and ethnic minority communities from access to
credit, and called upon HUD and its grantees to affirmatively further fair
housing.  The Fair Housing Act prohibits housing discrimination in the
sale, rental, or financing of housing or other housing-related activities on
the basis of race, color, religion, sex, disability, familial status, or
national origin.
[1]

 

While much progress has been made
in the half century since Congress adopted the Fair Housing Act, the nation has
more work to do to realize its promise.  According to the National Fair
Housing Alliance, over 4 million instances of housing discrimination occur each
year,
[2] and the nation faces tremendous
racial disparities in income, wealth, and homeownership.  For example,
there is a 32 point gap between the homeownership rates for Black and white
households, and a 26 point gap between Hispanic and white households.
[3]  In too many instances, a
person’s access to opportunity and quality of life are determined by where they
live in communities that still reflect the legacy of historic redlining. 

 

HUD’s existing Disparate Impact
Rule codified a longstanding tool for identifying and remedying housing
discrimination under the Fair Housing Act.  It was built on four decades
of jurisprudence and validated in the Supreme Court’s 2015 decision upholding
the use of disparate impact theory under the Fair Housing Act,
Texas
Department of Housing and Community Affairs v. Inclusive Communities Project
(“Inclusive
Communities”)  The current rule relies on a balanced, three-part
burden-shifting framework that follows the same formula as other
anti-discrimination legal standards and has been used for decades to seek fair
housing access for Black and Hispanic people, individuals with disabilities,
families with children, and victims of domestic violence.

 

At a recent Banking Committee
hearing, you claimed that HUD is simply offering this Proposed Rule in order to
better reflect the Supreme Court’s ruling in
Inclusive Communities
But under HUD’s proposed framework, disparate impact would exist in name
only.  HUD’s proposal would dramatically shift the current balanced
three-part test affirmed by the Supreme Court in
Inclusive Communities to
require a plaintiff to meet a five-part test to essentially prove their entire
case – and disprove the defendant’s case – before even bringing suit, without
the benefit of discovery.  Rather than reflect the
Inclusive
Communities
ruling, this Proposed Rule would undo the ruling by making it
nearly impossible to prove the disparate impact standard.

 

While raising the legal bar for
victims of discrimination, the Proposed Rule provides new defenses that will
allow financial institutions, insurance companies, governments, and other
market participants to continue unnecessary, discriminatory practices. 
This includes a new safe harbor for policies or practices driven by
algorithms.  Society is grappling with the far-ranging effects of opaque
and proprietary algorithms – often based on data harvested from our online
activities – on our daily lives.  Algorithms are only as good as the data
they are fed and many elements that appear neutral on their face have proven to
reinforce discriminatory patterns of the past. Despite these questions, the
Proposed Rule offers an expansive safe harbor for business practices that rely
on algorithms to make important decisions governing access to housing, such as
credit scores, automated underwriting, and rental tenant-screening
systems.  This broad exemption will prevent people who have been excluded
from housing based on flawed data from having an opportunity to seek
redress.  

 

The Proposed Rule contains other
provisions that will also place a heavy thumb on the scale for market
participants at the expense of people experiencing discrimination.  It
would permit corporations and others to defend a discriminatory practice simply
because implementing a less discriminatory policy would impose some greater
cost or burden on them.  At the same time, the Proposed Rule fails to
acknowledge the costs that discrimination imposes on individuals and society
when some of its members are denied a fair chance at housing.  The
Proposed Rule also reduces institutions’ accountability and incentives to
assess the fair housing results of their policy choices by removing any
expectation that they would collect data necessary to track the outcomes of
their policies.  Finally, the Proposed Rule removes any reference to
policies or practices that perpetuate segregated housing patterns.  This
attempt to remove segregated housing patterns as an element of disparate impact
would perpetuate discriminatory behavior and runs counter to the majority’s
opinion in
Inclusive Communities, which concludes with a statement that
“[the] Court acknowledges the Fair Housing Act’s continuing role in moving the
Nation toward a more integrated society.”
[4]

 

In their opinion,
the majority of the Supreme Court further acknowledged that “[m]uch progress
remains to be made in our Nation’s continuing struggle against racial
isolation.”
[5]  Housing is the foundation of opportunity
for individuals, families, neighborhoods, and society. Preventing housing
discrimination
including subtle,
hidden discrimination

is
central to the mission Congress charged HUD to carry out.  We urge you to
uphold this mission, reject the changes in the Proposed Rule, and preserve the
existing rule.

 

Sincerely,


[1] 78 Fed. Reg. 11460.

[4] Texas Department of Housing and
Community Affairs v. Inclusive Communities Project, Inc.
, 135 S. Ct. 2507,
2525-26 (2015).

[5] Id. at 2525.


[1] 78 Fed. Reg. 11460.

[4] Texas Department of Housing and
Community Affairs v. Inclusive Communities Project, Inc.
, 135 S. Ct. 2507,
2525-26 (2015).

[5] Id. at 2525.

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