American Banker: HUD plan to alter anti-discrimination rule called ‘deeply cynical’

American Banker, August 16, 2019: HUD plan to alter anti-discrimination rule called ‘deeply cynical’

The Department of Housing and Urban Development has published a proposed rule that would amend its “disparate impact” standard to effectively make it more difficult for consumers to allege discrimination under the Fair Housing Act.

Under HUD’s proposal, released Friday, a consumer would have to follow a five-step framework to demonstrate discrimination and would have to show that a policy or practice is “arbitrary, artificial and unnecessary,” to move forward with a claim.

Consumer groups criticized the plan, saying regulators should be increasing, not relaxing, oversight because fintech firms are using algorithms and machine learning to target consumers for a wide range of lending products that could be unintentionally discriminatory.

“HUD’s proposal makes it far more difficult for those injured by stealth discriminatory policies to prove discrimination,” Jesse Van Tol, CEO of the National Community Reinvestment Coalition, said in a press release. “The bar was already set high and HUD‘s proposal would put it in the stratosphere. It really strains credulity.”

He noted that more housing and credit decisions are moving into “black boxes” and “outside of any real oversight or the ability of consumers to effectively challenge the underlying information.”

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