Trade Groups Warn Against Re-codifying 2013 Disparate Impact Rule

The American Bankers Association and three other banking and mortgage groups today warned that re-codifying the Department of Housing and Urban Development’s 2013 disparate impact rule would run afoul of binding Supreme Court precedent. HUD proposed to recodify the 2013 rule, which would effectively nullify the previous administration’s September 2020 changes to that rule to align it more closely with the Supreme Court’s 2015 decision in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, which recognized disparate impact liability under the Fair Housing Act and explained the legal requirements for disparate impact claims.

The trade groups pointed out that HUD’s proposed recodification of the 2013 rule would reinstate a legal standard that is inconsistent with the Supreme Court’s ruling, and highlighted several specific areas of inconsistency. The letter is intended help ensure that HUD codifies a standard of disparate impact that is fully consistent with Supreme Court precedent and implements the Fair Housing Act’s requirements with a clear legal framework to address unlawful discrimination.

The trade groups also emphasized that changes to the rule with each new administration creates uncertainty for industry and fair housing advocates, and undermines the Fair Housing Act’s goal of expanding availability of housing including mortgage credit.