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Insurers Win Case Against Disparate Impact

A federal judge has ruled that HUD cannot bring fair housing cases against businesses by using only data to demonstrate discrimination. Specifically, a U.S. District Court judge in Washington, D.C.,  struck down a disparate impact case on Nov. 4 that was brought by the American Insurance Association and the National Association of Insurance Companies against HUD. 

The U.S. Supreme Court will ultimately decide the issue after recently agreeing to hear the disparate impact case, Texas Department of Housing v. Inclusive Communities Project. In the case, the allocation of tax credits is being challenged as an allegedly discriminatory practice under the Fair Housing Act (FHA) based on its disparate impact on minority residents. Two previous cases were accepted by the Court, but the parties settled prior to review, leaving the issue unresolved.

Disparate impact liability has created much uncertainty in the apartment and real estate industry since HUD’s final disparate impact rule was released in February 2013. Apartment business practices such as criminal background screening and Section 8 voucher program participation and policies can be viewed as potential areas of liability under the HUD disparate impact analysis.

Although disparate impact claims are available under other anti-discrimination statutes, Congress did not provide for such claims in the FHA. Therefore, a ruling by the Court will provide much needed clarity for owners and operators of multifamily housing.

Provided by NMHC as part of the NAA/NMHC Joint Legislative Program