ABA, State Associations Call on HUD to Clarify Disparate Impact

Responding to a request by the Department of Housing and Urban Development for suggestions of outdated or ineffective regulations, the American Bankers Association and state bankers associations in all 50 states today called for changes to HUD’s rule implementing the Fair Housing Act discriminatory effects standard, calling the rule “outdated and legally wrong.”

The groups noted that the rule stands in direct conflict with a Supreme Court decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, which held that “disparate impact” analysis to demonstrate discrimination claims is recognized under the Fair Housing Act, but included key limitations that placed the burden of proof in disparate impact cases with the plaintiffs. In addition, the groups pointed out that the rule provides no real-world guidance to promote compliance with the Fair Housing Act.

“The direct conflict between the rule and Inclusive Communities deprives regulated entities of certainty as to how disparate impact will be defined and applied under the Fair Housing Act,” the groups wrote. “A rule that creates, rather than eliminates, confusion undermines its own purpose and is entirely ineffective.”

ABA and the state associations have long called on the regulatory agencies to include the Supreme Court’s reasoning in formal guidance and exam procedures, and noted in the letter that they are willing to collaborate with HUD to develop a rule consistent with the legal precedent set by the Inclusive Communities decision.