In 2013, the U.S. Department of Housing and Urban Development passed what’s known as the “disparate impact” rule to protect marginalized people from policies that deny them a fair shot at safe housing.
Now, as the department seeks to change the rule and make it harder for accusers to make their housing disparity case, the National Fair Housing Alliance and other advocacy organizations have filed a federal lawsuit seeking to halt the change, just as it was set to go into effect Oct. 26. A judge temporarily stopped the change while the lawsuit moves forward.
Fair housing advocates are concerned that changing the rule would “make it virtually impossible” for racial minorities, women, immigrants, families with children, LGBTQ people, people of faith and people with disabilities, “to challenge the policies and practices of businesses, governments, and housing providers,” according to the National Low Income Housing Coalition.
And Chicago-area organizations say that, in a city already plagued by housing inequity, the change would make it essentially impossible to force insurance companies, mortgage lenders and housing providers to fix the problems at hand.
“Even under the previous rule, these cases were very hard to bring,” said Bob Palmer, policy director at Housing Action Illinois. “Even though discrimination is a big problem, the number of successful cases based on the prior disparate impact rule were not a huge number of cases.”
The new rule, he said, would make it “almost impossible” to bring a case, since it shifts the burden for who has to prove disparate impact.
The disparate impact rule targets practices that, while not explicitly discriminatory, have a disparate or unequal impact on Black and Latino people and other marginalized groups. They could be the result of hidden or unconscious bias, without any acts of bad faith from the perpetrator, but their resulting impact can put certain people at a disadvantage for access to housing — a serious issue in a country where redlining and other discriminatory practices have resulted in inequity that spans generations.
Advocates say the rule simply formalized practices that the Department of Housing and Urban Development, or HUD, had in place for decades, and survived a 2015 challenge before the U.S. Supreme Court.
As part of the Fair Housing Act, it requires that an accusing party prove the policy will cause disparate results for a protected class, and if the defendant shows there is a legitimate reason for the policy, the plaintiff must show an alternative way to accomplish the task in a less discriminatory way.
Examples cited in the lawsuit include an all-white county outside of New Orleans allowing property owners to rent housing only to their blood relatives — thus excluding non-white residents.
In a 1997 case, the Toledo Fair Housing Center alleged that an Ohio insurer’s refusal to provide insurance for homes of a certain age or worth less than a certain amount excluded 83% of homeowners in Black-majority neighborhoods, compared to 31% of white neighborhoods.
Moratoriums on multifamily housing were also cited as indirect ways of keeping out Black families who were more likely to live in such buildings.
But the change HUD is proposing would significantly increase the threshold for such cases to be heard in court, requiring plaintiffs prove the policies are arbitrary and unnecessary and directly cause “significant” disparity, the lawsuit alleges. It also eliminates the obligation for those companies to fix the issue if they can prove it serves “some legitimate purpose,” like a company’s profit motive.
And it’s not just people of color who are impacted, local organizations say.
Access Living of Metropolitan Chicago, an advocacy and services center for people with disabilities, says its clientele would suffer from the rule change, as well.
“Access Living does a lot of work in the housing arena because — not to sound hyperbolic — but there’s an obvious housing crisis for people of low incomes generally,” said Ken Walden, managing attorney at Access Living. “For people with disabilities, that housing crisis obviously exists.”
Affordability, accessibility and discrimination are at least three kinds of institutional factors that limit housing options for people with disabilities, Walden said.
“Studies have confirmed that there’s discrimination across the board against all protected classes, including people with disabilities,” he said.
While the disability community has other tools in its toolbox to fight discrimination, there are instances where disparate impact could affect litigation on behalf of people with disabilities, Walden said. If a housing provider requires residents to receive income from an employer, for example, that would unfairly rule out people with disabilities who are largely unemployed and rely on fixed income, he said.
“If that fixed income otherwise can support them in the unit, and they can afford the unit, the argument would be that that rule disparately impacts people with disabilities unfairly,” Walden said.
Discriminatory practices, like redlining, are still present in Chicago’s lending and housing market, said Morgan Williams, general counsel for the National Fair Housing Alliance.
“The policies — today’s policies — that drive those kinds of (discriminatory) outcomes are really best addressed with disparate impact, compliance and enforcement,” he said. “It’s a great example of this sort of rampant discrimination that remains in Chicago’s lending markets that requires … the robust use of this standard.
“And what HUD is proposing to do,” he said, “is to gut that standard.”
Chicago’s lingering segregation can be traced back to redlining, as the government and banks denied access for residents in majority-Black neighborhoods to mortgages and other financial needs tied to homeownership. For generations, its impact has propelled a large gap between Black and white populations in homeownership, education, health access and other factors.
A June report by the public radio station WBEZ on lending disparities that persist today was a driving force behind an October hearing before the Illinois senate on inequality in lending and homeownership. State Sens. Jacqueline Collins and Mattie Hunter probed banking officials and advocacy leaders on ideas for reform.
“Reporting and university studies have shown that the largest predictor of a Chicagoan’s ability to receive a home loan is still race, and the disparity in lending is worse now than it was in 1980,” Collins said. “This has fueled the cycle of generational poverty, and must be reformed.”
Palmer and his organization are not directly involved in the federal lawsuit, but they do hope it’s successful, he said. He wants Chicagoans to know that while the new rule would make proving disparate impact “near impossible,” it doesn’t take away from the fair housing laws already in place.
People who receive rental subsidies, for example, can’t be discriminated against in Chicago or Cook County, he said. But people need to know what their rights are before they can fight for them.
“Whether you’re a person seeking housing or a person who’s selling or renting housing, you should make sure you’re familiar with the existing laws,” he said. “Because this decision does not eliminate those protections, and people can still bring complaints.”
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