Lenders Oppose Weakening Bias Law -- WSJ
July 14 2020 - 3:02AM
Dow Jones News
By Andrew Ackerman
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 14, 2020).
Banks and mortgage lenders are urging the Trump administration
to scrap a plan to water down an Obama-era regulation aimed at
combating discrimination in housing, saying it is inappropriate
amid the national reckoning on race.
Bank of America Corp. and Quicken Loans Inc. in recent days came
out against the initiative, which would make it harder to pursue
housing-discrimination cases by raising the burden of proof needed
to bring a claim. Lenders were generally supportive of the changes
when they were floated last year.
"Given the recent protests and events, and the recognition of
where we are as a country, we would respectfully offer that the
time is not right to issue a new rule," Bank of America Vice
Chairman Anne Finucane wrote in a June 29 letter seen by The Wall
Street Journal and not previously reported.
On Monday, the National Association of Realtors, which had been
lukewarm toward the proposal, also urged the Department of Housing
and Urban Development to scrap it. HUD is charged with enforcing
the Fair Housing Act, a landmark antidiscrimination law enacted in
1968.
"There is broad consensus across the country that now is not the
time to issue a regulation that could hinder further progress
toward addressing ongoing systemic racism," NAR President Vince
Malta wrote to HUD secretary Ben Carson.
And in a separate letter on Friday, Quicken urged HUD to
reconsider its proposal, citing a "rising awareness surrounding
issues of racial justice, equity, and inclusion."
At issue is the so-called disparate-impact rule, which allows
plaintiffs to use statistical analysis to demonstrate that lenders
and housing providers promote policies that have a
disproportionately adverse impact on minorities. As a result,
plaintiffs can claim that banks, landlords or other firms violate
fair-housing laws without necessarily proving they did so with an
intent to discriminate.
The Obama administration in 2013 set out guidelines for bringing
discrimination cases against mortgage lenders, developers and home
insurers. Under those guidelines, the defendants must show that
they have a reasonable business objective for their policies.
A new plan floated last year would put a bigger burden of proof
on the plaintiffs and require them to clear a five-part test to
bring a fair-housing case -- including evidence that the allegedly
discriminatory practice is "arbitrary, artificial and
unnecessary."
HUD said the modifications would create clearer legal standards
in line with a 2015 Supreme Court decision that upheld the concept
of "disparate impact" in fair-housing cases.
A HUD spokesman, Bradley Bishop, declined to comment on the plan
while it is under review with the White House Office of Management
and Budget.
Consumer advocates have worried the changes would make it harder
to bring discrimination cases. Courts have consistently upheld the
disparate-impact doctrine but tend to give deference to the
government's interpretation of laws it enforces.
Because few people or organizations admit to racist views or
policies, there is rarely a paper trail proving intentional
discrimination, which has made disparate impact a key legal tool
for civil-rights advocates.
"This is a big flip," said Mike Calhoun, president of the Center
for Responsible Lending, which had urged lenders to reconsider
their support for the HUD plan. "The industry wanted certainty
against legal claims. It's now saying we realize this rule, which
clearly gives them that, undermines the broader societal goal of
how do we really address these structural barriers."
Lisa Rice, president and chief executive of the National Fair
Housing Alliance, said lenders have become increasingly
uncomfortable with President Trump's rhetoric on race, a factor in
their decision to distance themselves from the HUD plan.
"This is not sitting well with people," she said in an interview
with Mr. Calhoun.
Write to Andrew Ackerman at andrew.ackerman@wsj.com
(END) Dow Jones Newswires
July 14, 2020 02:47 ET (06:47 GMT)
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