Wednesday, November 5, 2014

Federal Judge Strikes Down HUD Rule on Housing Discrimination

 Federal Judge Strikes Down HUD Rule on Housing Discrimination

Disparate-Impact Rule Allowed Use of Statistical Analysis to Show Policies Had Adverse Effect on Minorities

Alan Zibel

Nov. 3, 2014 4:12 p.m. ET

WASHINGTON—A federal judge on Monday struck down a Department of Housing and Urban Development rule that aimed to make it easier for plaintiffs to file allegations of housing discrimination.

 issued in February 2013, was designed to make it easier to enforce a 45-year-old law to combat alleged discrimination by lenders, insurers, landlords and municipalities.

U.S. District Judge Richard Leon, in his decision, called the rule “yet another example of an administrative agency trying desperately to write into law that which Congress never intended to sanction.”
The HUD regulation, Judge Leon ruled in favor of two insurance industry groups—The American Insurance Association and National Association of Mutual Insurance Companies—which sued in June 2013 to overturn the rule.

The insurance industry argued in its lawsuit the HUD rules would harm companies that sell homeowners insurance, requiring them to “provide and price insurance in a manner that is wholly inconsistent with well-established principles of actuarial practice and applicable state insurance law.”

The so-called disparate-impact rule allows plaintiffs to use a statistical analysis to demonstrate that lenders or cities promoted policies that had a disproportionately adverse impact on minorities. Under the rule, plaintiffs can claim that lenders or cities violated fair-housing laws without proving they did so with an intent to discriminate.

The ruling comes a month after the Supreme Court agreed to review the “disparate impact” legal strategy, taking a case focusing on the allocation of low-income housing tax credits in Dallas. The Supreme Court has tried to take up the issue two other times in recent terms, but those cases settled before the court could decide them.

“The Department is reviewing the ruling and considering its options on appeal,” a HUD official said.

—Brent Kendall contributed to this article

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