HUD attempts to fix its own mistake

The Department will reinstitute an Obama-era rule and rescind one put in place by the Trump Administration to prevent confusion with housing discrimination issues

The U.S. Department of Housing and Urban Development (HUD) is trying to right its own perceived wrong.

In late June, HUD published a proposal to the Federal Register that would restore the Obama-era discriminatory effects rule (first published in 2013) and rescind the Trump-era disparate impact rule (first published in 2020), stating the “2013 rule is more consistent with decades of caselaw and better effectuates the (Fair Housing) Act’s broad remedial purpose of eradicating unnecessary discriminatory practices from the housing market.”

There was a strong belief that the 2020 update to the Act would have made it harder for those who were trying to seek fair housing justice to legally prove discrimination and that it complicated the assessment of discrimination by mandating new requirements of proof, new legal defenses, and changing the pleading requirements to cloud whether or not the Fair Housing Act was, in fact, violated.

“We must acknowledge that discrimination in housing continues today and that individuals, including people of color and those with disabilities, continue to be denied equal access to rental housing and homeownership.”

The 2020 rule never actually took effect because of a court injunction issued in the U.S. District Court for the District of Massachusetts as part of the Massachusetts Fair Housing Center v. HUD court case.

HUD indicated that by reverting back to the 2013 rule, it would allow for more clear analysis.

“We must acknowledge that discrimination in housing continues today and that individuals, including people of color and those with disabilities, continue to be denied equal access to rental housing and homeownership,” HUD Secretary Marcia Fudge told Housing Wire. “It is a new day at HUD-and our Department is working to lift barriers to housing and promote diverse, inclusive communities across the country.”

There has been a lot of consternation surrounding these rule modifications or potential rule changes. Former HUD Secretary Ben Carson issued guidelines that outlined a five-step approach that required regulators to identify intentional discrimination by lenders.

Under the 2013 rule, which HUD is looking to reinstate, housing providers and lenders could be liable for discrimination tactics even if it were unintentional.

But the Trump Administration began pushing for change as far back as the former president’s first year in office. In 2017, he asked the Department of the Treasury to urge HUD to change the disparate impact rule.

That got a lot of push back from other elected officials, as well as other civil rights groups and trade organizations including the National Association of REALTORS ®. These organizations banded together with one voice, expressing concern that the new rule would spur on additional housing discrimination through structured racism.

After the controversial changes were issued in 2020, a federal judge delivered a preliminary injunction in October to stop HUD from implementing the rule until the legal challenge was resolved.

President Biden issued a memorandum in the first week of his presidency ordering HUD to take all the necessary steps to ensure compliance with the Fair Housing Act

On January 26, 2021, President Biden issued a memorandum ordering HUD to “take all steps necessary” to examine the effects of the 2020 Rule, including the effect that amending the 2013 Rule has had on HUD’s statutory duty to ensure compliance with the Fair Housing Act.

According to the notice issued by HUD, those who wish to comment on the proposed rulemaking may do so through Aug. 24, 2021.

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