HUD Revives 2013 Rule On “Discriminatory Effects” In Fair Housing Act Cases

Mortgage News April 6, 2023

The U.S. Department of Housing and Urban Development (HUD) has announced the submission of a Final Rule to the Federal Register titled Restoring HUD’s Discriminatory Effects Standard. This Final Rule replaces the Department’s 2020 rule governing Fair Housing Act disparate impact claims with the 2013 discriminatory effects rule.

The US Department of Housing and Urban Development (HUD) has announced a Final Rule to rescind the 2020 rule governing Fair Housing Act disparate impact claims and restore the 2013 discriminatory effects rule. The 2013 rule is deemed to be more consistent with how the Act has been applied in the courts and in front of the agency for over 50 years.

The 2013 rule by HUD established the discriminatory effects doctrine as a precedent for Fair Housing Act cases, aligning with the established case law. This rule’s clear and essential framework played a significant role in promoting a housing market that is free from both intentional and unwarranted discrimination.

In contrast, the 2020 rule added new pleading requirements, proof requirements, and defenses, making it more challenging to establish that a policy violates the Fair Housing Act and harder for regulated entities to assess the lawfulness of their policies. With the Final Rule, HUD returns to the 2013 rule’s straightforward analysis.

The Fair Housing Act bars discrimination in housing and related services based on various factors, including race, color, religion, national origin, sex (including gender identity and sexual orientation), disability, and familial status. A functional discriminatory effects standard is crucial for the Biden-Harris Administration to realize its objective of establishing a housing market devoid of both intentional discrimination and policies/practices that lead to unjustifiable discriminatory effects.

HUD Secretary Marcia L. Fudge said that the Final Rule brings the country one step closer to ensuring fair housing for all. Discrimination in housing remains prevalent, and individuals, including people of color and people with disabilities, continue to be denied equal access to rental housing and homeownership.

The Final Rule becomes effective after 30 days of publication in the Federal Register. As the 2020 Rule’s implementation was halted in Massachusetts Fair Housing Center v. HUD, the 2013 Rule continues to be in effect. Entities following the 2013 Rule don’t need to make any changes to comply with this rule.

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