The Department of Housing and Urban Development (HUD) is tasked with enforcing the Fair Housing Act and one of the key tools used in enforcement is the Disparate Impact Rule, one that is used to protect against discrimination, either consciously or subconsciously engaged. HUD has recently reviewed the disparate impact rule and this may result in a broad effect on housing rules in the USA.
Anytime HUD reviews core policies, such as the disparate impact rule, landlords and property managers should take note and be aware that potential changes to tenant screening policies could be forthcoming.
The Fair Housing Act is enforced by the Department of Housing and Urban Development (HUD) oftentimes by the utilization of the Disparate Impact rule. Landlords and property managers should take note anytime HUD reviews core policies, especially the use of the Disparate Impact rule, as this could signal potential change to tenant screening and tenant background checks.
Under the previous administration the use of the disparate impact rule was enacted and became a critical component with the enforcement of the Fair Housing Act.
From HousingWire.com (May 10, 18):
Changes could be on the way for the Department of Housing and Urban Development’s disparate impact rule, a rule enacted by HUD during the Obama administration and used as a way to enforce the Fair Housing Act.
Under HUD’s rule, lenders, landlords, and other housing providers can be held liable for discrimination against protected classes even if it was not their intent to discriminate.
The use of disparate impact was challenged all the way up to the Supreme Court, which ruled in 2015 in favor of disparate impact. housingwire.com/articles/43340-hud-signals-changes-could-be-coming-to-disparate-impact-rule
Disparate Impact cases have appeared across a number of actions related to housing, such as banking and mortgage lending, as well as tenant screening, and can be enormously complicated. A best practice remains that landlords and property managers’ work with a professional third-party tenant screening agency to remain fully compliant with law, especially those against discrimination.
The rule of Disparate Impact can be complex.
From ArnoldPorter.com (May 18):
HUD’s disparate impact regulation was finalized in 2013, at which time the vast majority of federal courts of appeals had agreed that the FHA prohibits any practice that produces a discriminatory effect, regardless of discriminatory intent, but had taken various different approaches to determining liability under an “effects” standard. According to HUD, the disparate impact regulation was necessary to “formalize [HUD’s] long-held recognition of discriminatory effects liability under the [FHA]” and to provide “consistency nationwide.”
HUD’s current regulation establishes a burden-shifting framework for adjudicating disparate impact claims under the FHA, pursuant to which the charging federal agency or private plaintiff has the initial burden of demonstrating that a challenged practice caused, or predictably will cause, a discriminatory effect. A practice is deemed to have a discriminatory effect if it actually or predictably results in a disparate impact on a group of persons or creates, increases, reinforces, or perpetuates segregated housing patterns because of race, color, religion, sex, handicap, familial status, or national origin. ARNOLDPORTER.COM/EN/PERSPECTIVES/PUBLICATIONS/2018/05/HUD-TO-EVALUATE-DISPARATE-IMPACT
As HUD is reviewing the disparate impact rule now is the time for all organizations involved in the housing market to review their own policies and procedures especially landlords and property managers. The best way the apartment management industry can protect themselves from liability is to make certain that their tenant selection process does not discriminate any particular grouping of people directly or indirectly. To help with the process of becoming compliant or remaining compliant it is wise to work with a professional tenant screening agency. However, in the end the liability of being caught by HUD conducting a discriminatory tenant selection process falls on the landlord.
To learn more about the disparate impact rule and how recent review of this rule by HUD could impact the housing market read recent TenantScreeningUSA.com press release: HUD Recently Began Reviewing the Disparate Impact Rule Which May Have Broad Effect on Housing Rules; Opines TenantScreeningUSA.com