WE’RE HEARING about the Fair Housing Act or FHA. It can be confusing when you share an acronym with a well-known agency in the same industry. Throughout this story you will need to reprogram your brain so that FHA means Fair Housing Act and not the FHA you are familiar with. Twelve states have filed a friend of the court brief in an upcoming U.S. Supreme Court case, Township of Mt. Holly et al v. Mt. Holly Gardens Citizens In Action Inc.
The case involves a challenge to the FHA. The friend of the court brief asks the Supreme Court to uphold an existing interpretation of the FHA and allow disparate impact claims of discrimination in housing and lending. The twelve states include California, Connecticut, Hawaii, Illinois, Massachusetts and New York. The brief explains that states have been using a disparate impact theory to enforce the FHA to prevent abuses that lead to residential segregation along with its social and economic harms.
A disparate impact claim focuses on the outcome of a practice as opposed to its intent. It is a tool that the 12 states rely on in enforcing the FHA and their own state laws against discrimination. The brief goes on to say that the intent of modern day housing practices may appear neutral towards a particular minority group but in practice there are many areas where the impact of a subtle practice proves to be discriminatory.
The brief also discusses the recent subprime crisis and the practice of steering minority groups into unaffordable loans, high foreclosure rates and other unpleasant things that need fixing. Statistically there are 98 state and local agencies across the USA that receive funding from HUD to investigate housing discrimination claims. Over the last four years there have been 7,500 to 8,500 complaints each year that were investigated.
I remember an attorney at a New York firm I worked with years ago who sued a Realtor over a discriminatory remark that was left on an answering machine. That was a case where both the intent and practice were not too bright and someone got to pay for it. Essentially there is no end to the trouble people can get into in this business.
Even in the great state of Kentucky people can run into trouble. It turns out that the CFPB is suing a law firm over alleged kickbacks under RESPA. The kickbacks are alleged to be in exchange for the referral of settlement business. We are also hearing about the Kentucky Department of Financial Institutions taking several enforcement actions lately against out of state lenders/brokers who were licensed in Kentucky to originate loans but were all using unregistered loan processors.
Other violations included an unregistered branch office and using a name that was on the no-no list. The Kentucky DFI also denied a license to someone who forgot to mention that they had their license revoked in Missouri, the Show Me State. Basically folks if you are applying for a license in any state just assume that you are in the Tell Me State because big brother is watching.
Based in Chelsea, Mich., John McDermott is a real estate and elder care attorney who represents both consumers and businesses. He can be emailed at firstname.lastname@example.org.