HUD Restores ‘Discriminatory Effects’ Rule

HUD on Friday submitted to the Federal Register a Final Rule, Restoring HUD’s Discriminatory Effects Standard, rescinding the Department’s 2020 rule governing Fair Housing Act disparate impact claims and restoring its 2013 discriminatory effects rule.

In the Final Rule, HUD emphasizes that the 2013 rule is more consistent with how the Fair Housing Act has been applied in the courts and in front of the agency for more than 50 years, and that it more effectively implements the Act’s broad remedial purpose of eliminating unnecessary discriminatory practices from the housing market.

“Discrimination in housing continues today and individuals, including people of color and people with disabilities, continue to be denied equal access to rental housing and homeownership,” said HUD Secretary Marcia L. Fudge. “Today’s rule brings us one step closer to ensuring fair housing is a reality for all in this country.” 

“Due to a preliminary injunction staying the implementation of the 2020 Rule in Massachusetts Fair Housing Center v. HUD, the 2020 Rule never went into effect, and the 2013 Rule – which has been in place for nearly a decade – has been and is currently still in effect,” said Alisha Sears, Director and Regulatory Counsel with the Mortgage Bankers Association. “Accordingly, regulated entities that were complying with the 2013 Rule have no need to change any practices they have in place to comply with this rule.”

Sears noted MBA has criticized the 2013 rule in the past, and that MBA will continue to evaluate options for lenders.

HUD’s 2013 discriminatory effects rule codified long-standing caselaw for adjudication of Fair Housing Act cases under the discriminatory effects doctrine, for cases filed administratively with HUD and for federal court actions brought by private plaintiffs. Under the 2013 rule, the discriminatory effects framework was straightforward: a policy that had a discriminatory effect on a protected class was unlawful if it was not necessary to achieve a substantial, legitimate, nondiscriminatory interest or if a less discriminatory alternative could also serve that interest.

The 2020 rule, created by the Trump Administration, added new pleading requirements, new proof requirements, and new defenses, which HUD now says made more difficult to establish that a policy violates the Fair Housing Act and harder for entities regulated by the Fair Housing Act to assess whether their policies were lawful.

Read HUD’s Final Rule on Restoring HUD’s Discriminatory Effects Standard.

For further information, reference this Fact Sheet.