Posted on August 20, 2019

HUD Proposal Raises Bar on Housing Discrimination Complaints

Lalita Clozel, Wall Street Journal, August 19, 2019

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Under a new plan published Monday in the Federal Register, HUD would raise the burden of proof they must meet to bring a claim, making it harder for civil-rights groups and others to pursue housing discrimination cases.

At issue is a longstanding legal precedent that allows plaintiffs to pursue claims based on statistical evidence that a lender or developer’s policies have a “disparate impact” on minorities, rather than proof of explicit bias.

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Under the new plan, HUD would require plaintiffs to clear a five-part test to bring a fair-housing case—including evidence that the allegedly discriminatory practice is “arbitrary, artificial and unnecessary.”

HUD said the modifications would create clearer legal standards in line with a 2015 Supreme Court decision that upheld the concept of disparate impact in fair-housing cases but also said plaintiffs should draw a causal relationship between their statistical analysis and a specific lending or hiring policy they seek to challenge.

“The disparate-impact concept is a nebulous and complex doctrine that, using statistics, could be used to challenge many, many actions,” Paul Compton HUD’s general counsel, said in a call with reporters. “The goal here is to bring more certainty into this area of the law so that state and local governments, mortgage lenders, fair housing advocates, everybody can understand what disparate impact is.”

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HUD’s plan “basically is saying that you have to prove your entire case when you file it. This is unheard of,” Lisa Rice, president and chief executive of the National Fair Housing Alliance, said in an interview. “This is just another attempt by the Trump administration to take away yet another civil-rights protection.”

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The Justice Department has also discussed rewriting antidiscrimination regulations to remove the doctrine of disparate impact so that no federal agency can use it, according to administration officials.

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“Cases can’t proceed just on statistics alone,” said Paul Hancock, a partner at K&L Gates who has represented industry in several disparate-impact lawsuits. “Just because there’s a disparity doesn’t mean you can bring a claim.”