District Court Dismisses Disparate Impact Claim under the Fair Housing Act

In The Inclusive Cmtys. Project, Inc. v. The Tex. Dep’t of Hous. and Cmty., No. 3:08-cv-00546-D (N.D. Tex. Aug. 26, 2016), on remand from the Supreme Court and the Fifth Circuit, the district court dismissed claims of disparate impact under the Fair Housing Act (FHA) where the plaintiff alleged that the defendant allocated two different types of tax credits in a manner that perpetuated racial segregation. The district court applied the Supreme Court’s previously explained three-part burden-shifting framework to analyze the plaintiff’s claim, and determined that, among other things, the plaintiff’s claim failed to show a “specific, facially neutral policy” causing a racially disparate impact. The court reasoned that “[b]y relying simply on [the defendant’s] exercise of discretion in awarding tax credits, [the plaintiff] has not isolated and identified the specific practice that caused the disparity in the location of low-income housing…. [The plaintiff] cannot rely on this generalized policy of discretion to prove disparate impact.” The district court further reasoned that because the plaintiff had not “sufficiently identified a specific, facially-neutral policy that has caused a statistically disparity,” the court could not “fashion a remedy that removes that policy.”  The district court concluded that the plaintiff “failed to prove a prima facie case of discrimination by showing that a challenged practice caused a discriminatory effect” and entered judgment in favor of the defendants.

LinkedInFacebookTwitterGoogle+Share

HUD Issues Guidance Regarding the Application of Fair Housing Act Standards to the Use of Criminal Records

On April 4, HUD issued guidance deploying a disparate impact analysis with respect to the Fair Housing Act’s application to the use of criminal history by those who come under the Fair Housing Act, and in particular by providers or operators of housing and real-estate related transactions. The guidance indicates that, because African Americans and Hispanics are arrested, convicted and incarcerated at rates disproportionate to their share of the general population, criminal records-based barriers to housing are likely to have a disproportionate impact on minority home seekers. HUD then walks through the three step burden-shifting disparate impact analysis to support its argument. To determine whether the use of criminal history has, on its face, a discriminatory effect, HUD looks at national statistics to demonstrate that incarceration rates are disproportionate for African Americans and Hispanics. HUD also notes that, while state or local statistics should be presented when available, national statistics may be used where state or local statistics are not readily available and there is no reason to believe they would differ markedly from the national statistics. Read more…

LinkedInFacebookTwitterGoogle+Share

House Financial Services Committee: CFPB Removed Safeguards to Achieve Political Goals

On January 20, Republicans on the House Committee on Financial Services issued a report alleging that the CFPB removed a number of safeguards from the claims process after it secured its first settlement with an auto finance company and the company’s subsidiary bank in 2013. The Committee’s most recent report follows a November 2015 report in which the Republican staff (i) criticized the CFPB’s approach for determining discrimination in the auto lending industry; and (ii) questioned the CFPB’s authority to bring claims against banks involved in indirect auto lending under ECOA on a disparate impact theory. According to the more recently published report, the CFPB failed to confirm that funds from the 2013 settlement would be distributed to eligible recipients. Read more…

LinkedInFacebookTwitterGoogle+Share

House Report Examines the CFPB’s Methodology in Auto Finance Investigations

On November 24, Republicans on the House Committee on Financial Services issued a report regarding the CFPB’s approach for determining discrimination in the auto lending industry. The report questions the CFPB’s proxy methodology and its authority to bring claims against banks involved in indirect auto lending under the Equal Credit Opportunity Act’s (ECOA) disparate impact theory. According to the report, disparate impact “is a controversial legal theory of liability in discrimination cases.” The report further states that, even if it assumes that the ECOA permits disparate impact claims, the CFPB is nonetheless required to identify the following to establish a prima facie case: (i) a specific policy or practice adopted by the creditor; (ii) disparate impact on a prohibited basis; and (iii) a causal relationship between the challenged practice and the alleged disparate impact. Read more…

LinkedInFacebookTwitterGoogle+Share

U.S. Attorney General Lynch: “More Determined Than Ever to Vigorously Enforce the Fair Housing Act”

On September 2, U.S. Attorney General Loretta Lynch delivered remarks at HUD’s Fair Housing Policy Conference. In her remarks, Lynch stressed the importance of fair housing as being a primary driver “to access to employment, to education, to credit, to transportation, to safety and to a whole range of institutions and opportunities.” Lynch stated that she is “more determined than ever to vigorously enforce the Fair Housing Act (FHA).” Among other things, Lynch provided an overview on how the DOJ is implementing new programs, technology, and research to conduct electronic testing, allowing the DOJ to expand the reach of its Fair Housing Testing Program. The Attorney General also expressed her support of HUD’s recently issued “Affirmatively Furthering Fair Housing” rule, and signaled that the DOJ intends to “vigorously enforce” the FHA using every available tool, including the disparate impact theory, which the Supreme Court ruled recently as a valid enforcement tool to challenge unfair mortgage lending practices.

LinkedInFacebookTwitterGoogle+Share