ICBA Backs Court Challenge to Disparate-Impact Rule

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By Lilly Thomas

ICBA recently backed a court challenge to the Department of Housing and Urban Development’s disparate-impact rule. In a friend-of-the-court brief for the American Insurance Association v. HUD Case, ICBA and a coalition of other groups said the HUD rule exceeds the department’s authority and should be vacated.

HUD’s rule, which formalizes the national standard for Fair Housing Act violations, maintains the disparate-impact theory that lenders may be held liable for neutral practices that have a disparate impact on certain classes of borrowers, even if the lenders have no intent to discriminate.

In the joint amicus brief, ICBA said HUD’s rule does not conform with Supreme Court precedent, including limitations in last year’s decision upholding the disparate-impact approach. In the Texas Department of Housing and Community Affairs v. Inclusive Communities Project Case, the high court limited how the theory can be applied so companies can make the practical and profit-motivated business choices that sustain the free-enterprise system.

While the Supreme Court decision was a setback for the financial services industry, it nevertheless set a precedent that disparate-impact cases cannot rely on statistics alone and that the accuser must also cite the specific policy that causes the disparate result. ICBA is working with Congress to advance legislation to ensure federal laws truly support fair and equitable mortgage lending.


Lilly Thomas (lilly.thomas@icba.org) is ICBA vice president and senior regulatory counsel.

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