Currently there is considerable attention being given to a fair housing case the Supreme Court is set to hear in the near future. Some have said that this case could have substantial effects on fair lending litigation. While it is not impossible this is the case, in all likelihood, I believe that the case will have little effect on fair lending litigation.
First, the case is from a factual standpoint completely different from a fair lending situation. It involves a group of landlords suing a city over aggressive code enforcement, who claim that requiring compliance with safety codes reduced the supply of housing to minorities. This is far different from a situation where a lender is accused of not lending to minorities or lending at predatory rates.
Moreover, it is not brought pursuant to ECOA and/or other laws that often supply the legal foundation to fair lending litigation. In fact, even if the court were to decide that disparate impact did not apply under the fair housing act, that would not necessarily mean that a similar analysis would automatically apply to ECOA.
Finally, even if the Supreme Court did make a sweeping and land-breaking pronouncement in a manner favorable to the mortgage industry beyond what is necessary to decide the case, any such decision is almost guaranteed to be negated by the CFPB-which would undoubtedly establish regulations to moot the Court's decision. If the Court's decision applies a disparate impact analysis, it would merely be confirming a position most courts have assumed applies up to this point.
At the end of the day, this case could have some interesting implications for lawyers, but it is very unclear what practical legal impact it will have on lenders. It is worth keeping an eye on, but certainly not losing sleep over.
