HUD Proposes Update to Rules on Housing Discrimination

The Department of Housing and Urban Development (HUD) today published a proposed rule updating the interpretation of the disparate impact standard in home financing. The update would require plaintiffs who allege disparate impact discrimination to meet a five-point threshold to prove their case.

HUD argues that its proposed rewrite brings existing regulations in line with a 2015 Supreme Court decision, Texas Department of Housing and Community Affairs v. Inclusive Communities Project. In its opinion, the court undertook its own analysis of the Fair Housing Act and disparate impact as opposed to using the existing HUD rule on the matter. HUD’s proposed rewrite attempts to move its rule in line with the Supreme Court’s decision.

The proposed rule’s five-part threshold is viewed by HUD as a “burden-shifting approach” and requires plaintiffs to:

·         Establish that the practice in question was “arbitrary, artificial and unnecessary” and allege a “robust causal link;”

·         Show that claims relying on statistical disparities articulate how the analysis supports a claim of disparate impact by providing comparisons;

·         Show that a practice adversely affects members of a protected class, not simply an individual;

·         Show that a disparity is “significant,” and;

·         Show that alleged injury is directly caused by the practice in question.

Consumer advocates argue that the proposed rule weakens necessary protections for protected classes and makes it more difficult to bring lawsuits.

AFSA plans to comment. We agree with HUD that it’s rule should follow the Supreme Court’s decision, which laid out important considerations.