The U.S. Department of Housing and Urban Development (HUD) announced a Proposed Rule on Disparate Impact under the Fair Housing Act (FHA) on August 16. NMHC and NAA will soon file comments with HUD voicing strong support for the agency’s newly released proposed rule. NMHC and NAA have long-raised concerns that HUD’s existing disparate impact doctrine created uncertainty for housing providers and undermined the use of necessary business practices and have argued for the agency to better align its regulations and policies with recent court decisions. The Proposed Rule directly addresses a number of our priorities and is an important step in addressing barriers to new apartment development and housing affordability. We strongly encourage NMHC and NAA members to take action as well and submit additional comments. The deadline for filing comments with HUD is October 18, 2019.
Disparate impact theory creates liability for seemingly neutral policies that nonetheless have a discriminatory effect on a protected class. In 2013, HUD issued a final rule formalizing the agency’s position on disparate impact liability and establishing uniform standards for determining when a real estate practice or policy violates the FHA. Subsequently, the U.S. Supreme Court issued a milestone decision on disparate impact liability in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. (Inclusive Communities), which created new limitations on the use of the theory.
NMHC and NAA documented the diverging disparate impact standards being used in a white paper that reviews a range of court cases involving: tax credit allocation, project decision making, mortgage lending, zoning, preference policies, insurance and screening policies. In 2018, we urged HUD to revise the 2013 Rule to ensure compatibility with the Supreme Court and reissue guidance that helps housing providers execute long-held business practices without running afoul of fair housing requirements.
NMHC and NAA are currently conducting a thorough review of the Proposed Rule and will provide additional detail on our industry response prior to the October comment deadline. To learn more about Fair Housing, visit our advocacy page.