Disparate impact could make proving discrimination a numbers game

by MPA05 Jan 2015
The U.S. Supreme Court is set to hear oral arguments this month on whether disparate impact claims may be brought under the Fair Housing Act.  If the justices decide to uphold the rule, lending discrimination could be proved by looking at population data.

“In other words, the CFPB [Consumer Financial Protection Bureau] does not have to prove intent to discriminate,” wrote Rob Chrisman. “If your numbers don't line up with the population, you are guilty, no questions asked.”

In November 2014, a federal judge tossed out the Department of Housing and Urban Development’s (HUD) regulation, which was designed at making filing allegations of housing discrimination easier.

Judge Richard Leon of the D.C. Circuit Court called the Obama administration-issued rule an “another example of an administrative agency trying desperately to write into law that which Congress never intended to sanction.”

HUD finalized the controversial rule in February 2013 that stated discrimination could be proved using disparate impact, meaning looking at statistical analysis to see whether one demographic fares differently from another. The regulation is aimed at combating alleged discrimination by lenders, insurers, landlords and municipalities.

In the Texas Department of Housing and Community Affairs (TDHCA) vs. The Inclusive Communities Project case, plaintiffs claim the TDHCA denied tax credit applications in majority-white and majority-Hispanic neighborhoods. The mortgage industry argues that they should only be liable if they intend to discriminate.

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