HARRISBURG — Attorney General Josh Shapiro today filed formal comments demanding that the U.S. Department of Housing and Urban Development keep in place a rule that protects consumers from housing discrimination. The HUD Disparate Impact Rule protects against lending practices that do not mention race, religion, national origin, sex, disability, and familial status — but which still produce a discriminatory effect.
The action by Attorney General Shapiro and 16 other Attorneys General comes at a time when other housing discrimination practices, like redlining, have come under increasing scrutiny in Pennsylvania and across the country.
“I am investigating redlining in the city of Philadelphia to ensure that no consumer faces unlawful discrimination,” Attorney General Shapiro said. “If HUD changes its rule on disparate impact, that could open the door for lenders to further discriminate against borrowers. Redlining and other forms of housing discrimination are wrong, and they harm individuals seeking mortgages or housing. These practices hold our cities and neighborhoods back – that’s why I am working to end them and protect consumers.”
In June, HUD began a process to consider rewriting the Disparate Impact Rule. The Attorneys General, who have widespread experience enforcing fair housing laws and addressing discrimination in housing and lending, sent formal comments today to HUD recommending the agency keep the current rule in place to protect consumers from loan discrimination.
Previous Disparate Impact Rule cases corrected mortgage company practices that led African-American and Hispanic borrowers to pay, on average, hundreds of dollars more for their loans than similarly-situated white borrowers. Today, because of the growing role of data analytics and online data in the housing sale and rental markets, disparate impact enforcement is more important than ever.
In 2015, the U.S. Supreme Court set out a framework for legal analysis that is consistent with HUD’s Disparate Impact Rule. Now, HUD has announced plans to consider rewriting the rule, despite the Supreme Court’s decision. In their comments today, the Attorneys General write: “No changes are appropriate to the 2013 final rule.” The Attorneys General warned that any changes to the rule could face a “legal challenge.”
Earlier this year, a Reveal article identified a pattern of discrimination in which African American borrowers were 2.7 times more likely to be denied a home mortgage in Philadelphia than white borrowers. It also found white applicants received 10 times as many loans as black applicants, even though they make up similar proportions of population.
That led Attorney General Shapiro to order an investigation by his Bureau of Consumer Protection of such redlining practices in the Philadelphia region. That probe remains ongoing.
In addition to Attorney General Shapiro and North Carolina Attorney General Josh Stein, the formal comments on HUD’s Disparate Impact Rule were signed by the Attorneys General of California, the District of Columbia, Illinois, Iowa, Maine, Massachusetts, Maryland, Minnesota, New Jersey, New York, Oregon, Rhode Island, Virginia, Vermont, and Washington.
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