April Is Fair Housing Month

April 7, 2023
Housing discrimination has been illegal since the passage of the Fair Housing Act (FHA) in 1968. The FHA was intended to both prohibit housing discrimination and reverse the history of housing segregation. To reach those goals, the federal FHA prohibits discrimination in the sale, rental, or financing of housing on the basis of race, color, […]

Housing discrimination has been illegal since the passage of the Fair Housing Act (FHA) in 1968. The FHA was intended to both prohibit housing discrimination and reverse the history of housing segregation. To reach those goals, the federal FHA prohibits discrimination in the sale, rental, or financing of housing on the basis of race, color, religion, national origin, sex, disability, and familial status. Through its Equal Access Rule, the U.S. Department of Housing and Urban Development (HUD) interprets the prohibitions against discrimination on the basis of sex and marital status to include sexual orientation, gender identity, and same-sex marriage.

Coverage of the FHA is broad and includes intentionally discriminatory conduct and practices that have an unjustified discriminatory effect.  Among other prohibited practices, the FHA’s scope includes taking any of the following actions because of race, color, religion, sex (including gender identity and sexual orientation), disability, familial status, or national origin:

  • Advertising of sale and rental housing and mortgage credit;
  • Falsely denying housing availability for inspection, sale, or rental;
  • Making or publishing advertising regarding sale or rental of a dwelling indicating a preference, limitation, or discrimination;
  • Harassing or retaliating against consumers for exercising their rights under FHA;
  • Blockbusting (the practice of encouraging homeowners to sell or rent homes below market value due to nearby, or supposed nearby, demographic changes);
  • Discriminating in the provision of homeowners insurance;
  • Denying access to real estate broker organizations or multiple listing services;
  • Discriminating in appraisals;
  • Refusing to provide information regarding mortgage loans;
  • Providing different levels of assistance or customer service to mortgage applicants;
  • Discriminating in the availability, terms, or conditions of mortgage loans;
  • Servicing loans, including modifications to home loans, in a discriminatory manner;
  • Failing to consider disability income in mortgage lending;
  • Refusing to provide mortgages to applicants on parental leave;
  • Steering mortgage applicants to less favorable products; and
  • Redlining.

For mortgage lenders, Fair Housing Month is an opportunity to assess your fair lending program and your success in meeting the housing credit needs of diverse borrowers and communities. When evaluating your fair lending program, ask yourself:

  • Does your institution’s monitoring and testing cover all aspects of housing credit, including marketing, applications, underwriting, appraisals, pricing, and servicing?
  • Are you comparing yourself to appropriate peer groups, as well as to the market as a whole, when evaluating redlining risks?
  • Have you evaluated underwriting and pricing criteria, including the use of models, for disparate impact?
  • If you operate in areas with state or local fair housing laws, does your monitoring and testing consider any state or local differences in prohibited bases?
  • When monitoring and testing identifies risks, do you have appropriate remediation, reporting, and escalation processes to senior management and the Board of Directors?

When assessing your success in meeting the mortgage needs of communities, lenders should consider whether your institution:

  • Offers suitable mortgage products to serve the needs of borrowers and communities in your footprint, including FHA, VA, USDA, and low-down payment products;
  • Considers the role your institution can play in meeting needs identified by state or local Analyses of Impediments to Fair Housing Choice[1] or similar reports;
  • Engages with community groups to understand community needs, build relationships, and name recognition;
  • Maintains programs to improve mortgage affordability, such as down payment assistance programs, state or local bond programs, or housing grants;
  • Operates special purpose credit programs to aid in penetrating historically underserved communities;
  • Hires diverse mortgage lenders;
  • Provides homebuyer education;
  • Finances affordable multi-family housing;
  • Conducts outreach to historically underserved communities and peoples;
  • Thoroughly assesses complaints to identify potential discrimination and opportunities for enhancement; and
  • Works diligently to assist homeowners in financial distress.

To summarize, fair housing is an important public policy goal as well as critical to a just and equitable society. Mortgage lenders play a key role in helping communities meet fair housing needs. As part of Fair Housing Month activities, lenders should evaluate their efforts and performance in expanding fair access to housing credit.

If your institution needs assistance in conducting fair housing, fair lending, or community credit needs analyses, RiskExec has a team of former bankers, regulators, fair banking officers, and CRA officers that can help. We are proud to help advance fair housing. You can find out more about our solutions at Asurity.com/RiskExec or by contacting me at LWoosley@asurity.com.

Lynn Woosley is a Managing Director with RiskExec. She has more than 30 years’ risk management experience in both financial services and regulatory environments. She is an expert in consumer protection, including fair lending, community reinvestment, and UDAAP.

Before joining RiskExec, Lynn led the fair banking practice for an advisory firm. She has also held multiple leadership positions, including Senior Vice President and Fair and Responsible Banking Officer, within the Enterprise Risk Management division of a top 10 bank.

Prior to joining the private sector, Lynn served as Senior Examiner and Fair Lending Advisory Economist at the Federal Reserve Bank of Atlanta.

[1] An Analysis of Impediments to Fair Housing Choice historically was a requirement under HUD Consolidated Plan and Community Development Block Grant (CDBG) Regulations. Under HUD’s proposed Affirmatively Furthering Fair Housing Rule, similar assessments would be required of recipients of funding from the CDBG program, the Emergency Solutions Grants (ESG) program, the HOME Investment Partnerships (HOME) program, the Housing Trust Fund (HTF), and the Housing Opportunities for Persons with AIDS (HOPWA) program and public housing agencies (PHAs) receiving assistance under sections 8 or 9 of the United States Housing Act of1937. Examples of other useful planning documents include Federal Home Loan Bank Targeted Community Lending Plans and housing policy research from the Mortgage Bankers Association’s Convergence program.

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