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By Lilly Thomas
With policymakers reviewing the 2013 fair lending rule that can hold lenders liable for neutral practices that have a disparate impact on certain classes of borrowers, ICBA is urging community bankers to weigh in.
The Department of Housing and Urban Development is looking to amend its disparate-impact rule after the U.S. Supreme Court imposed limitations on how disparate impact is applied in a 2015 decision. In Texas Department of Housing and Community Affairs v. The Inclusive Communities Project Inc., the high court held that disparate-impact cases cannot rely on statistics alone and must identify a specific policy that causes the perceived disparity.
While HUD’s rule could hold lenders liable even if they have no intent to discriminate, the court said accusers must demonstrate a causal connection between a challenged practice and the statistical disparity affecting a protected class. Even then, the lender is not engaged in illegal discrimination if the practice has a legitimate, nondiscriminatory business rationale.
As HUD seeks public input on possible amendments to the 2013 rule, community bankers can use ICBA’s Be Heard grassroots resource center to advocate that HUD amend its rule. The custom message to HUD notes that the current rule is inconsistent with the Supreme Court ruling, creates uncertainty for community banks, and should be aligned with the court decision.
By working together and making our voices heard, ICBA and the nation’s community bankers can help establish a single, consistent framework that will support practical business choices and needed lending to local communities.
Lilly Thomas is ICBA senior vice president and senior regulatory counsel.