Letter to the Department of Housing and Urban Development

To Whom It May Concern:

I am writing on behalf of Demos in response to the U.S. Department of Housing and Urban Development (HUD) notice referenced above concerning proposed changes to the disparate impact standard. The existing Disparate Impact Rule is an essential tool for contesting discriminatory housing policies that appear to be neutral but ultimately affect members of a protected class—including communities of color—in highly damaging ways. The Disparate Impact standard is critical to continued and enhanced opportunity to access fair credit, housing, and homeownership. Accordingly, Demos strongly opposes efforts to undermine this longstanding enforcement tool.  We urge HUD to entirely withdraw the Proposed Rule, making no changes to the current Disparate Impact Rule.

Demos is a public policy and advocacy organization that helps power the movement for a just, inclusive, multiracial democracy and an economy rooted in racial equity. Our extensive research and advocacy work on fair credit and lending includes studies on debt, credit reporting, and student lending.1 Our work analyzes the often-subtle and ostensibly “colorblind” forms of discrimination in lending that have a profound impact over time, contributing to America’s deep and growing racial wealth gaps.2 In 2013, for example, the median white household possessed $13 in net wealth for every dollar held by the median Black household in 2013. That same year, the median white household possessed $10 for each dollar held by the median Latinx household. Because homeownership is the principal source of wealth for millions of American families, discrimination in mortgage lending plays a particularly troubling role in worsening wealth disparities by race.3

The Fair Housing Act, with its ambitious statement of purpose “to provide…for fair housing throughout the United States,”4 represents our shared interest as a nation in ensuring that housing opportunities are available to all. Whether people rent or own homes, everyone deserves access to a safe and stable place to live, and the opportunities it provides. Central to the effectiveness of the FHA in achieving Congress’s stated goal is that the Act prohibits intentional discriminatory acts and facially “neutral” policies that limit housing opportunities based on race, color, national origin, religion, sex, the presence of families with children, and people with disabilities.  Fully realizing the promises of the Fair Housing Act for every person in the United States is central to HUD’s mission. 

Demos shares this central mission and we write to urge you not to revise HUD’s existing Disparate Impact Rule.  HUD’s new proposed rule would undermine HUD’s ability to meet its critical obligation to achieve the Fair Housing Act’s “central purpose . . . to eradicate discriminatory practices within a sector of our Nation’s economy.”5 HUD’s current Disparate Impact Rule is a necessary tool to achieve fairer standards in lending, rationally-based insurance pricing, and homeownership accessibility. 

We are especially concerned that increasing the requirements to bring a disparate impact case will make it more difficult to combat discriminatory mortgage lending that contributes to America’s racial wealth gap. Because homeownership is Americans’ primary means of building wealth, the racial wealth gap is closely connected to the nation’s unequal homeownership rates. In the second quarter of 2019, 73 percent of white households owned their homes, compared to 41 percent of Black households and 47 percent of Latinx households.6 According to an analysis by Demos and the Institute on Assets and Social Policy at Brandeis University, equalizing homeownership rates between Black, Latinx and white households would reduce wealth disparities between Black and white households by 31 percent and would decrease wealth disparities between Latinx and white households by 28 percent.7  

The effect of equalizing homeownership rates across race and ethnicity would be even greater if not for generations of discrimination—including redlining, racial exclusion from neighborhoods where home values appreciate, and biased lending practices—that segregate people of color into neighborhoods subject to systematic disinvestment so that even when Black and Latinx families own their homes, they grow in value at a far slower rate than homes in predominantly white neighborhoods. By making it dramatically more demanding to demonstrate the impact of discrimination in home lending and home buying, HUD’s proposed changes to the Disparate Impact Rule radically undermine a critical tool for combatting these noxious trends.

HUD’s Proposed Rule would destroy disparate impact liability and allow insurance companies, financial institutions, and other major corporations to engage in covert discriminatory practices without any consequences. It would leave communities of color and other groups without protection from unfair and discriminatory policies. HUD’s Proposed Rule goes against the very purpose of the Fair Housing Act to prohibit housing discrimination and instead gives companies more defenses to justify their policies.

Demos strongly urges you not to proceed with the proposed rule. HUD should withdraw this proposed rule immediately and follow its mission to enforce our fair housing and fair lending laws.


Amy Traub
Associate Director of Policy and Research