Let’s Stick With What Works
Nearly fifty years ago, Congress passed the Fair Housing Act as a way of confronting the problems of residential segregation and conditions of poverty which blocked access to opportunity to communities of color and led to bitterness, frustration, and civil unrest.
From the outset, the bipartisan sponsors and supporters of the Fair Housing Act recognized that, given the pervasiveness and complexity of housing discrimination, it was necessary to prohibit all forms of discrimination including that resulting from discriminatory intent, as well as acts neutral on their face that had a discriminatory effect.
The future efficacy of the Fair Housing Act as a tool in fighting the full range of housing-related discrimination is now in question as we await the decision of the United States Supreme Court’s decision in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, a case challenging the use of the disparate impact standard, a standard which focuses on actions that have an unfair impact and which lack business necessity and which has long been accepted by all of the Courts of Appeals in the country.
This standard has been a vital tool in combatting discrimination. Persistent housing segregation is one clear indication of the need for its continued existence. An adverse ruling in the case also threatens to undermine the Fair Housing Act’s effectiveness in fighting more subtle, but still harmful policies and practices.
One striking example of the continuing need for an effective way of addressing the increasingly subtle ways in which groups protected by the Fair Housing Act are denied equal access to housing can be seen in the wake of the economic crisis of 2008. During the run-up to the crisis, discriminatory lending practices became increasingly prevalent, including providing high-cost, subprime loans to members of communities of color who actually qualified for prime loans. In 2005, 55 percent of all subprime borrowers had sufficiently high credit scores to qualify for prime loans and these borrowers were disproportionately people of color. A joint report from HUD and the Department of the Treasury found that, as of 2000, “borrowers in black neighborhoods [were] five times as likely to refinance in the subprime market than borrowers in white neighborhoods,” even after controlling for income. Even more striking was the finding that “borrowers in upper-income black neighborhoods were twice as likely as homeowners in low-income white neighborhoods to refinance with a subprime loan.”
These communities had previously experienced a long history of intentional discrimination in the form of racial steering, redlining and lack of access to financial institutions offering fair borrowing options. The new practice of extending mortgages on predatory terms added new injury to the old. The combination of the new abusive lending practices and the history of redlining and systematic disinvestment resulted in a foreclosure crisis that had a particularly serious impact on communities of color and reversed many of the economic gains which had been realized by those communities over the past half century. The only legal redress for the policies that facilitated this discrimination, such as compensating originators more for high-cost loans, is a disparate impact claim, since no individual would be able to demonstrate the discriminatory consequences of these policies that fueled the subprime bubble without relying on evidence of their collective, broad impact. Cases challenging the lending practices that brought about the economic crisis that threatened the economy as a whole, but had particularly serious consequences on individuals and communities of color, illustrate that the disparate impact standard is a careful, measured way of protecting all Americans from discrimination. After plaintiffs have shown that a policy or practice has a disproportionate impact on protected classes, defendants have the opportunity to demonstrate that there is a substantial legitimate reason for the practice and policy. Policies only violate the fair housing act if they have no legitimate justification or if there is a less discriminatory way to achieve the same purpose.
By permitting the consideration of impact as well as goals and the means of achieving those goals, the disparate impact standard permits challenges to barriers which prohibit equal opportunity to fair housing. It is common sense that any policy that unnecessarily excludes people from housing on the basis of their religion, gender, race, ethnicity, family status, disability or other protected criteria should be set aside in favor of one that serves everyone's needs fairly, effectively, and without discrimination. The disparate impact standard is a common sense way of assuring effective and equal fair housing opportunity and its use should be protected. To do otherwise would undercut decades of progress and betray the efforts of the people nearly half a century ago who sought to assure fairness and equality in housing by passing the Fair Housing Act. Should the Supreme Court Act take steps that threaten the continuing vitality of this important statue, the President and Congress should take whatever steps are necessary to restore its role as a critical tool for achieving equality and fairness.