AG Schneiderman Announces Settlement with Real Estate Brokerages for Alleged Housing Discrimination Based on Income Source

On May 23, New York AG Eric Schneiderman announced that his office reached settlements with three real estate brokerages operating in New York City, Nassau County, and Westchester County. According to the AG’s press release, the three firms unlawfully discriminated against potential housing applicants with Section 8 vouchers, which provide rental assistance and a home ownership option to low income households in New York State. During the AG’s investigation, undercover phone testers posing as prospective tenants with Section 8 vouchers were allegedly told by one firm that they would be placed on a months-long waitlist for the apartment in question; in contrast, testers who did not mention the vouchers were told that the units were immediately available. That firm’s manager allegedly testified, in substance, that “a waitlist was essentially used to reject unwanted prospective tenants.” Similarly, the other two firms allegedly “told undercover testers that Section 8 and other government assistance programs would not be accepted at certain properties.” The press release also emphasized that one firm failed to follow its written policy prohibiting income-source discrimination, and another firm did not have a written fair-housing compliance policy at all. Under the settlement agreements, the brokerages must: (i) forward any complaints and documentation regarding housing discrimination to the AG; (ii) develop new non-discriminatory policies; (iii) maintain rental information about certain properties and provide such information to the AG for compliance review; and (iv) pay fines ranging from $13,000 to $40,000. Two of the firms must also have their employees attend training on fair housing.

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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…

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HUD Reaches $2.8 Million Settlement Over Redlining Allegations

On February 29, HUD announced an agreement with a Kansas City-based bank over its alleged redlining practices against African-American mortgage applicants. Two fair housing organizations (Complainants) filed separate complaints with HUD in October 2015 alleging that the bank engaged in discriminatory acts and violated the Fair Housing Act. According to Complainants, the bank’s “lack of market penetration in African-American communities made residential real estate products less available to persons based on race.” Complainants further alleged that the bank “designated their service area, or assessment area, in a way that excluded areas of high African-American concentration, which resulted in making residential real estate products less available to persons based on race” – a practice generally referred to as redlining. The agreement requires that the bank must, during the three-year agreement period: (i) allocate $75,000 in subsidy funds to provide discounts on home purchase loans to majority African-American census tracts in the Kansas City area; and (ii) originate $2.5 million in mortgage loans in African-American neighborhoods. Read more…

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District Court Applies Supreme Court’s Inclusive Communities Decision in Rejecting Disparate Impact Claim

On July 17, the U.S. District Court for the Central District of California granted summary judgment for Wells Fargo in a Fair Housing Act (FHA) case brought by the City of Los Angeles. City of Los Angeles v. Wells Fargo & Co., No. 2:13-cv-09007-ODW (RZx) (C.D. Cal. July 17, 2015). The City alleged that the bank engaged in mortgage lending practices that had a disparate impact on minority borrowers. In rejecting the City’s claims, the court’s opinion heavily relied on the Supreme Court’s recent decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., which imposed limitations on the disparate impact theory of liability under the FHA, despite holding that the theory remains cognizable. 135 S. Ct. 2507 (2015). Citing Inclusive Communities, the district court warned that disparate impact claims may only seek to “remove policies that are artificial, arbitrary, and unnecessary barriers and not valid governmental and private priorities.” The court further held that the City failed to point to a specific defendant policy that caused the disparate impact and failed to show “robust causality” between any of defendant’s policies and the alleged statistical disparity, as Inclusive Communities requires. The court also rejected the notion that disparate impact claims could be used to impose new policies on lenders, and said that the City’s argument that lenders should adopt policies to avoid disproportionate lending was a “roundabout way of arguing for a racial quota,” which Inclusive Communities also warns against. Finally, the court was sharply critical of the City’s argument that Federal Housing Administration loans are harmful to minority borrowers, and that, in any event, any disparate impact from these loans would be a result of the federal government’s policies, not the defendant’s policies.

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Rhode Island Modifies its Fair Housing Practices Act to Include Military Status Under Discrimination Protections

On July 9, Governor Raimondo signed S.0241, which amends the Rhode Island Fair Housing Practices Act to include discrimination based on a person’s military status as a prohibited and unlawful housing and credit granting practice. Protected classes now include veterans with an honorable discharge (or an honorable or general administrative discharge), and active servicemembers in the Armed Forces.  The amendments are effective immediately.

 

 

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