The housing industry’s disparate impact hopes

When Trump’s administration was inaugurated in January 2017, many people knew automatically that he was so determined to “punish” his “enemies” and I chose to put these two words in quotes because they are strong words, especially given the context. Plus I feel they fit in because we all know the history between the two former presidents.

Anyway, One of the areas that saw radical changes was the housing industry. Just a few months into office, Trump was already rescinding the Affirmatively Furthering Fair Housing rule which is a rule meant to prevent discriminatory housing practices and segregation. In short, he reversed a rule meant to combat discrimination in a sector that is heavily reliant on fairness and equality. The Affirmatively Furthering Fair Housing rule was established by President Obama in 2015. Basically, the AFFH requires communities that recieve grants and housing aid to assess racial segregation in the housing industry and offer plans to correct such actions.

When reversing this rule, HUD termed it as “unworkable and ultimately a waste of time for localities to comply with.”

A move which didn’t quite sit well with many people, in fact, senator Chuck Schumer tweeted; “President Trump is actively working to gut fair housing laws and legalize housing discrimination,” adding, “We will fight this.”

But… Even though the administration was on record to rescind the move, some states and local jurisdiction continued to require the local agencies to ensure that they complied with the requirements of the AFFH and a good example was California.

“Let’s be clear: the President is using racist fear-mongering to say he’s happy to dismantle civil rights in search of a political advantage,” Democratic U.S. Senator Elizabeth Warren wrote on Twitter.

That’s about it and just to recap; the AFFH was an Obama-Era fair housing rule. Trump enters the office and rescinds the rule, Democrats are not happy about it, but what can they do? and just to be clear, AFFH is not a segregated case, there were so many others, but I have chosen to focus on this particular case because it forms the basis of this article’s discussion.

SO WHAT’S THIS ‘DISPARATE IMPACT?’

To understand what disparate impact really is, we have to go way back.

The 2015 rule- the AFFH-was introduced as a way to beef up the enforcement of the landmark Fair Housing Act of 1968.

The AFFH required that local jurisdictions keep a track of patterns of poverty and segregation with a checklist of about 92 questions. This would help determine the distribution of the federal housing funds, effectively combating segregation.

When Trump’s administration decided to remove the AFFH, they said that the regulation was “too prescriptive in outcomes for jurisdictions.”

“Since the issuance of the 2015 final rule, HUD has determined that the current regulations are overly burdensome to both HUD and grantees and are ineffective in helping program participants meet their reporting obligations,” according to the rescinding proposal by HUD.

BUT NOTE, THE MOVE BY HUD WAS MALICIOUS AND ILL-INTENTIONED.

It wasn’t the first time that HUD had tried to tamper with the rules of Fair Housing. In fact, the then HUD secretary, Ben Carson had at one time derided that these laws were a “social engineering.”

FAST FORWARD TO 2018.

Some fair housing groups take Ben Carson and his agency to court, but they are unsuccessful. This came after Carson failed to implement the AFFH resulting in a five-year delay. In August, HUD comes up with a clever proposal to ‘revamp’ the groundbreaking 2013 ‘disparate impact,’ rule making it harder to prove unintentional discrimination.

PAY ATTENTION TO ‘UNINTENTIONAL DISCRIMINATION.’

Earlier on I said that the housing industry relies heavily on fairness and equality. These two are the main drivers of this industry without which the industry would collapse.

But, we don’t live in a utopian world. Discrimination still exists and while to some extent we’ve fought it, we haven’t been able to eliminate it completely. Not by a long shot.

Today, discrimination still occurs and is practiced, more subtly. A form that is less dangerous and a configuration in the form of disparate impact.

In short, disparate impact is a policy that seems so neutral superficially but in practice does a lot of damage, disproportionately having a negative effect on a certain group of people. In essence, they are the policies that hinder equal access.

It is usually unintentional in nature and while it might be accidental it is nonetheless considered a violation of the Civil Rights Act, thus warranting legal intervention.

Well, I hope that lengthy explanation clears up what disparate impact is.

So, in our country, when the disparate impact is in question, definitely know that these are practices that adversely affect one group of people more than the others.

Proving disparate impact often requires statistical data and analysis, but this is not always the case. To some degree, the Disparate impact in the housing industry has been dealt with, but much work still needs to be done. Which is how we ended up in this place, trying to revive this critical piece of legislation.

Is There Any Hope Left For Disparate Impact? Even before I answer the question for you, I don’t understand why HUD would repeal such an amazing act.

In 2011, the same agency found and acknowledged disparate impacts in domestic violence. The

department sought to rectify disparate impacts being experienced by victims of domestic violence. In a Memorandum, it stated that survivors of domestic violence were often being denied access to housing on the basis of zero-tolerance violence policies.

About 25% of women experience domestic violence of some sought.

And it even gets worse if we were to look at the statistics on the basis of race. Thus, zero-tolerance had a disparate impact on these groups. When I think about that, I cannot find any valid reason why HUD would rescind the rule claiming that it is ‘burdensome.’ it makes no sense!

SO, IS THERE ANY HOPE LEFT?

Yes! There is still hope. After all, wasn’t Biden part of the Obama administration? I think most of what Biden will be doing in his first term is taking corrective measures, which he is doing.

So, it’s affirmative that there is still hope for the disparate impact regulation. But even before Biden stepped into the office, there was some progress made to revive this rule.

In 2015, the Supreme Court set a new legal precedent which was in favor of disparate Impact effectively stating that the intent of the Fair Housing Act included disparate impact.

ONE WIN FOR DISPARATE IMPACT RIGHT?

Right….but the problem was, during the trial, the supreme court deviated from the HUD’s 2013 rule to diminish the likelihood of “abusive disparate impact claims,” and by the way, the supreme court ruling in question was the Texas Department of Housing and Community Affairs v. Inclusive Communities Project.

Fast forward to 2019. HUD issued a proposed guideline clarifying how disparate impact cases were brought to the court. The proposal changed the burden of proof bringing it in alignment with the Supreme Court ruling of 2015.

Basically, the proposal forced the plaintiff to anticipate the defendant’s case and preemptively fight against it. In addition, the proposal brought another requirement in that the plaintiff was needed to show that a different, non-discriminating policy would be just as profitable for the defendant. Furthermore, the 2019 guideline provided business protection to all businesses based their decision on algorithms resulting in discriminatory impacts and lastly, it disincentivized businesses from collecting data that would prove discriminatory practices. Thus, considering what the disparate impact is, the 2019 changes by HUD were a huge blow to the equal rights movement.

Enter 2020, disparate impact is losing the war! In October, the Finalized HUD rule went into effect. With just a little deviation from 2019 proposals, the finalized rule added a layer of complexity in that it was now extremely difficult for a person to prove disparate impact.

The finalized rule required plaintiffs to show quite significant evidence for his/her claims to be sustained. This time, part of the evidence was to prove that the policies in question were both arbitrary and unnecessary. In addition, the Finalized Rule required that the plaintiff prove that there is a direct connection between the policy in question and its causation, which in some cases can be extremely difficult!

Looking at the changes brought forth by the Finalized Rule, it is clear that it is in large part favoring the defendant, requiring unnecessary guesswork on the part of the plaintiff. Moreover, the language surrounding the alternative policies proposed by the Finalized Rule seems to be against eliminating discrimination. For a plaintiff to show such evidence, it would mean that they understand the internal workings of what they claim to be causing the discrimination, which in this case would be algorithms. Do not forget, this information is proprietary! So, how can they beat that? Reviving Disparate Impact It’s 2021 and we have a new administration.

SO WHERE ARE WE WITH DISPARATE IMPACT?

In late January, Pres. Joe Biden issued an executive order which directed HUD to examine the effects of the rule which included its impacts “on HUD’s statutory duty to ensure compliance with the Fair Housing Act.”

THE GOOD NEWS IS THAT HUD RESTORED ITS EARLIER DEFINITION OF AFFH

The new AFFH rule is already in effect and rescinds Trump’s 2020 rule, “Preserving Neighborhood and Community Choice.”

Trump’s era HUD defined fair housing as “housing that, among other attributes is affordable, safe, decent, free of unlawful discrimination, and accessible under civil rights laws,” and this is something the new law seeks to rectify.

Much of what is being done now is retraining back to where we left off in 2013. The memo by the current president ordered the HUD Secretary to examine the effects of the previous administration’s actions against the AFFH Rule and the Disparate Impact Rule and the effect it has on HUD Statutory duty in ensuring compliance with the Fair Housing Act and to affirmatively further fair housing. Additionally, the memo by the president ordered the HUD Secretary to take the necessary measures to implement Fair Housing Act’s AFFH requirements and also prevent practices that have a disparate impact.

What I can affirmatively confirm is that the Disparate Impact rule will certainly be restored. And I share that confidence really because many industry stakeholders want it back. The rollbacks by the Trump administration of this rule did not hold as they were halted due to preliminary nationwide injunction and that was before the current administration.

But, the rule will have to go through the federal rulemaking process in accordance with the Administrative Procedures Act (APA). as such, HUD will be required to publish a Notice of Proposed Rulemaking (NPRM) which is followed by a congressional review by the House House Financial Services Committee and Senate Banking, Housing, and Urban Affairs Committee, a public comment period that typically lasts 60 days, and a review and response of all comments by HUD before the final rule can be posted.

So, we’ll have to just wait, but there is hope for the Disparate Impact Rule of 2013.

Sources;

https://www.housingwire.com/articles/the-housingindustrys-disparate-impact-hopes/ https://www.housingwire.com/articles/hud-takes-firststep-to-restore-fair-housing-rule/ https://www.arnoldporter.com/en/perspectives/ publications/2021/07/hud-rulemaking-mayincrease-disparate-impact-test#:~:text=The%20 2013%20rule%20sets%20out,of%20race%2C%20 color%2C%20religion%2C https://www.homelight.com/blog/buyer-what-isdisparate-impact/ https://www.reuters.com/article/us-usa-trump-suburbsidUSKCN24U35O https://www.politico.com/news/2020/01/06/trumproll-back-obama-housing-desegregation-094874 https://www.brookings.edu/blog/ techtank/2021/03/05/algorithms-and-housingdiscrimination-rethinking-huds-new-disparateimpact-rule/ https://journals.library.columbia.edu/index.php/stlr/ article/view/7963 https://www.urban.org/sites/default/files/ publication/101015/huds_proposal_to_revise_the_ disparate_impact_standard_0.pdf https://nlihc.org/resource/hud-publish-new-affh-anddisparate-impact-rules https://nlihc.org/resource/nlihc-signs-four-letterssupporting-proposal-reinstate-2013-disparateimpact-rule