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"The pendulum always swings twice: Disparate impact under the Obama, Trump, and Biden administrations" by Jeffrey P. Naimon and Sasha Leonhardt (American Bar Association Consumer Financial Services Committee Newsletter)

American Bar Association

Sasha Leonhardt, Jeffrey P. Naimon

For over forty years, courts took the lead on interpreting the Fair Housing Act’s (“FHA’s”) prohibition on discriminatory housing practices, including home mortgage lending. While different administrations have varied as to whether the Supreme Court’s disparate impact theory from the Griggs v. Duke Power employment discrimination case should be used to establish discrimination under the FHA, courts generally were willing to extend disparate impact to housing as well. Over decades of real-world experience, federal courts created a burden-shifting test to determine whether a housing provider engaged in discrimination.

During the Obama administration, several FHA disparate impact cases began moving through federal appeals courts and toward the Supreme Court, threatening to give the Court the opportunity to narrow or eliminate the use of disparate impact under the FHA.[1] In response, the Obama administration’s Department of Housing and Urban Development (“HUD”) worked with the Department of Justice to promulgate HUD’s first disparate impact rule in 2013. During the next eight years, both presidential administrations and the Supreme Court have swung the pendulum of what disparate impact means back and forth several times. In a market where housing is built to last for decades and thirty years is a standard term for a home mortgage loan, these oscillating views of disparate impact have created challenges for consumers, housing advocates, mortgage lenders, home builders, and local governments establishing housing polices for American families.

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