Point of View: HUD’s Latest Attack on Fair Housing

HUD published today its Disparate Impact proposed rule, the latest of HUD Secretary Carson’s efforts to gut fair housing protections. With this proposal, Secretary Carson would dismantle a critical enforcement tool for combatting discrimination, further restricting access to housing for people of color, seniors, people with disabilities, families with children, LGBTQ people, victims of domestic violence, and others.

Throughout his tenure at HUD, Secretary Carson has prioritized undermining fair housing protections. Under his leadership, HUD has slowed or stopped most high-priority fair housing investigations and enforcement. When the city of Houston violated federal fair housing law by perpetuating racial segregation, Secretary Carson let the city off the hook by agreeing to a weak, largely unenforceable settlement. Last year, a court had to intervene to prevent Secretary Carson from reversing policies that make it easier for low-income families to move out of high-poverty and segregated neighborhoods. Secretary Carson effectively suspended the Affirmatively Furthering Fair Housing rule, the agency’s strongest effort in decades to reverse harmful patterns of segregation and discriminatory practices in communities across the country. Now, he seeks to weaken the process to prove disparate impacts in housing and other policy. 

The Fair Housing Act prohibits housing policies and practices that have a discriminatory or disparate impact, even if there was no obvious intent to discriminate. Eleven U.S. Courts of Appeals and the Supreme Court have ruled that violations of the Fair Housing Act can be established through a disparate-impact standard of proof. HUD’s current Disparate Impact regulation codifies decades of federal court rulings to establish uniform “burden-shifting” standards for determining when a housing practice or policy with a discriminatory effect violates the Fair Housing Act. 

Secretary Carson’s proposed Disparate Impact rule would radically change these standards to place virtually all the burden on people of color, women, immigrants, people with disabilities, LGBTQ people, and other protected classes. The changes are designed to make it much more difficult, if not impossible, for protected classes to challenge and overcome discriminatory effects in housing.

Overt, explicit discrimination is less common in our country than it was decades ago – for the most part, we have cultural norms and laws that prevent it - but implicit discrimination is notuncommon. Take disaster recovery, for example. Time and again we have seen federal disaster rebuilding dollars favor higher-income white communities over lower-income black communities. After Hurricane Katrina, New Orleans created programs that awarded funds based on the pre-storm value of a home rather than on the cost to reconstruct it. The outcome: lower-income black families living in distressed communities with lower home values received far less in rebuilding money that higher income white families, even though the cost to rebuild homes was about the same for both. After Hurricane Harvey, local discretion in designing and implementing rebuilding programs resulted in white families in higher-income neighborhoods receiving about $60,000 of recovery dollars per resident while black families in poorer neighborhoods received, on average, $84 per person.

Restrictive local zoning laws are another example. City councils rarely state explicitly that the purpose for new zoning laws is to keep certain protected classes out of their communities, but that is very often at the root of local zoning decisions. The Des Moines, Iowa city council is proposing a new minimum house sizes and prohibiting the use of less expensive building materials. They propose these changes just as the local Latino population is increasing. The Des Moines Latino population has, on average, lower incomes than the white Des Moines population, and so would be disproportionately harmed by these proposed zoning changes. 

Even if the policymakers behind these programs did not intend to discriminate, there is a negative outcome for protected classes, and the discriminatory impact is proven and rectified with disparate impact, the very tool that HUD now proposes to weaken. 

A striking theme in Secretary Carson’s proposed rule is his efforts to tip the scale in favor of defendants that are accused of discrimination. He would shift the burden of proof entirely to the plaintiff; victims of discrimination are asked to try to guess what justifications a defendant might invoke and preemptively counter them. Secretary Carson further proposes making a profitable policy or practice immune from challenge of discriminatory impact unless the victims of discrimination can prove that a company could make at least as much money without discriminating. In other words, according to Secretary Carson, the profit justifies the discrimination.

Also noteworthy: Secretary Carson creates new defenses for lenders and others that use algorithms with potentially discriminatory outcomes. For example, under HUD’s proposal a lender would be permitted to continue using an algorithm with a discriminatory impact if the algorithm in use is considered an “industry standard.” In other words, if all lenders adopt discriminatory underwriting standards, none would be liable. The lender using an algorithm with a discriminatory impact could, by Secretary Carson’s recommendation, avoid any liability by having its vendor be solely responsible. 

We cannot allow these proposals to be implemented. The promise and obligations of the Fair Housing Act are more important than ever. The housing crisis is worsening, along with its disproportionate harm to people of color. The racial wealth gap is growing, with generational impacts on black and Latino families. Black homeownership has declined to levels below rates when discrimination was legal. Racial segregation persists and concentrated poverty grows. 

There are tremendous racial disparities in our country’s housing system. Disparate impact is a critical tool for overcoming and reversing these disparities, and this is the very tool that Secretary Carson seeks to dismantle. Rather than attempting to weaken the disparate impact rule, HUD should be working to vigorously enforce it.

We’ll work to ensure they do.

Join us.