WASHINGTON (6/18/13)--The U.S. Supreme Court Monday announced it will hear a case that could decide the fate of the application of disparate impact theory under the Fair Housing Act. Disparate impact focuses on discrimination based on effects and not intent. The case, known asMount Holly v. Mount Holly Citizens In Action Inc. (No.11-1507), is detailed in the June 17 issue of the Credit Union National Association's Regulatory Advocacy Report.
The case concerns a New Jersey township's plan to redevelop a blighted residential area occupied predominantly by low- and moderate-income minority households. The suit alleged that a disproportionate number of minorities would be affected by the relocation required by the plan and would be unable to afford the new housing proposed under the plan.
The current issue of the RAR notes that the Fair Housing Act makes it unlawful to "refuse to sell or rent after the making of a bona fide offer … or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin." Despite the lack of textual support for disparate impact claims in the Fair Housing Act, the federal appeals courts have permitted the claims to proceed.
CUNA's regulatory experts explain that the case is important because the Consumer Financial Protection Bureau has also insisted that disparate impact claims are viable under the Fair Housing Act and the Equal Credit Opportunity Act even though they are not supported by the text of the statutes.
"The CFPB has discussed the use of disparate impact analysis in a letter discussing indirect lending. A decision in Mount Holly could very well determine the extent the CFPB can use disparate impact moving forward," says the RAR.
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