The Department of Housing and Urban Development recently proposed rescinding its 2020 rule interpreting the Fair Housing Act’s "disparate impact" standard and restoring its 2013 rule on discriminatory effects.
New Proposal: HUD’s proposed rule would overturn its September 2020 rule, which was designed to conform with a 2015 U.S. Supreme Court ruling but was blocked by a Massachusetts district court before taking effect.
2013 Rule: Under HUD's 2013 rule, lenders could be held liable for neutral practices that have a disparate impact on certain classes of borrowers, even if the lenders had no intent to discriminate.
Court Case: In Texas Department of Housing and Community Affairs v. Inclusive Communities Project, the Supreme Court upheld the disparate-impact approach while ruling that disparate-impact cases must demonstrate a robust causal link between practices and alleged discriminatory impact.
2020 Rule: In response to the high court decision, HUD's ICBA-supported 2020 final rule required plaintiffs to meet a five-step framework that established legal liability for facially neutral practices that have unintended discriminatory effects.
ICBA Position: ICBA supports equal access to credit through consistent enforcement of the fair lending laws and believes any disparate-impact cause of action should demonstrate a robust causal link between a statistical disparity and a specific policy or practice.
Next: ICBA is evaluating the proposal and will submit comments by the Aug. 24 deadline.
