At issue is the Trump administration’s proposed regulation to implement a 2015 Supreme Court interpretation of the Fair Housing Act. In that ruling, the justices affirmed that the law banned not only explicitly intentional housing discrimination but also the “disparate impact” of ostensibly neutral business practices. Since banks, real estate agents and others rarely leave “smoking gun” evidence of racial or other bias, disparate impact litigation is key to rooting out the implicit factors that result in segregated neighborhoods or apartment buildings. Indeed, this may be doubly important as computer algorithms — and the assumptions upon which they are based — guide more and more decisions about who gets mortgages or leases.
The administration’s Department of Housing and Urban Development, led by Secretary Ben Carson, wrote a proposed rule last year that cited language in the court ruling urging it to enforce the law without requiring racial quotas or subjecting the private sector to excessive litigation. Yet the rule went too far in the other direction by imposing a burden of proof on alleged victims of discrimination to show that a statistical disparity in housing access resulted directly from an unjustifiable policy. By contrast, the Obama administration’s approach put the burden on housing providers to show that their selection criteria for mortgages or leases were truly legitimate ones to which there was no practical alternative. Not surprisingly, major financial and housing-related trade groups encouraged the HUD rule as it was being finalized last year.
In recent days, however, key institutions in the housing sector have individually called on HUD to rescind the regulation, which has yet to take effect. “Given the recent protests and events, and the recognition of where we are as a country, we would respectfully offer that the time is not right to issue a new rule on disparate impact,” a top Bank of America executive wrote. Mortgage provider Quicken Loans and Wells Fargo sent similar letters. On July 13, the powerful National Association of Realtors, which had already expressed reservations about aspects of the proposed rule last year, called on HUD to pause it. The association asked HUD to work with industry and fair housing advocates “to eliminate unnecessary barriers to housing opportunity and advance policies that allow more Americans to fully participate in the American Dream.”
Various of the companies’ letters frankly alluded to George Floyd’s death, the history of segregation in America and, in the case of Bank of America’s letter, “numerous conversations with employees inside our own company.” Their advice, in other words, comes out of apparently real reconsideration of their own best interests, as well as the public interest. To reject that advice, as Mr. Carson did in an interview with Yahoo News Tuesday, suggests that the Trump administration is not engaged in such reflection itself.