How to file a complaint for housing or lending discrimination
Discrimination is alive and well in housing, despite the presence of strong laws against it. The Fair Housing Act exists to protect people from discrimination when securing rental housing, buying a home and securing home financing.
There have been many enforcement cases against banks and other companies for discriminatory lending in recent years, as well as a long history of discrimination by private companies and public agencies. It’s important to know the types of discrimination that are happening and also how to file a complaint in case you find yourself or someone you know a victim of housing discrimination.
What the law says about housing discrimination
From the Department of Housing and Urban Development (HUD) web site we find the following description:
“In the Sale and Rental of Housing: No one may take any of the following actions based on race, color, national origin, religion, sex, familial status or handicap:
- Refuse to rent or sell housing
- Refuse to negotiate for housing
- Make housing unavailable
- Deny a dwelling
- Set different terms, conditions or privileges for sale or rental of a dwelling
- Provide different housing services or facilities
- Falsely deny that housing is available for inspection, sale, or rental
- For profit, persuade owners to sell or rent (blockbusting) or
- Deny anyone access to or membership in a facility or service (such as a multiple listing service) related to the sale or rental of housing.
In Mortgage Lending: No one may take any of the following actions based on race, color, national origin, religion, sex, familial status or handicap (disability):
- Refuse to make a mortgage loan
- Refuse to provide information regarding loans
- Impose different terms or conditions on a loan, such as different interest rates, points, or fees
- Discriminate in appraising property
- Refuse to purchase a loan or
- Set different terms or conditions for purchasing a loan.
In Addition: It is illegal for anyone to:
· Threaten, coerce, intimidate or interfere with anyone exercising a fair housing right or assisting others who exercise that right
· Advertise or make any statement that indicates a limitation or preference based on race, color, national origin, religion, sex, familial status, or handicap. This prohibition against discriminatory advertising applies to single-family and owner-occupied housing that is otherwise exempt from the Fair Housing Act.”
Recent examples of housing discrimination
Recent court cases filed by the Department of Justice to enforce the Fair Housing Act span many types of discrimination. Some of the more common types of discrimination prosecuted includes discriminatory lending practices, the the discriminatory restriction of lending by bank branch placement and/or marketing, and requiring extra paperwork in a discriminatory manner.
In 2012, Wells Fargo agreed to pay $175 million in response to claims that it charged African-Americans and Hispanics higher rates and fees on mortgages than it did to white home buyers with the same credit profiles. An investigation found 34,000 borrowers were affected and in 4,000 cases, borrowers were steered into subprime mortgages when they qualified for better loans.
The Department of Housing and Urban Development (HUD) filed charges in early 2017 against Bank of America for discriminating against Hispanic mortgage borrowers in South Carolina. The bank is being charged with offering Hispanic borrowers worse terms with higher closing costs and monthly payments than non-Hispanic borrowers.
In 2013, the Department of Justice reached a settlement with Community State Bank in Michigan that they “engaged in a pattern or practice of discrimination on the basis of race.” Community State Bank was one of the five largest banks in Saginaw County, but never operated a branch in the City of Saginaw and only made one loan between 2006 to 2009 in Saginaw’s majority African American census tracts.
A map from the Department of Justice showing the absence of lending by Community State Bank over a four year period in African American-majority districts.
In 2015, Associated Bank reached a $200 million settlement with the Department of Housing and Urban Development for discriminatory lending practices for the denial of mortgage loans to African Americans and Hispanic applicants in Chicago, Milwaukee, and Minneapolis compared to other lenders in the area.
These are just a few examples of lawsuits filed and settlements reached related to housing discrimination in recent years. I include these examples to illustrate some of the ways that discrimination manifests itself for borrowers, but there are many more. Since 2010, the Fair Lending Unit of the Department of Justice has tackled 23 cases, the settlements from which have provided at least $660 million in monetary relief for affected communities and 300,000 individual borrowers.
The history and impact of housing discrimination
Up until the Fair Housing Act was passed in 1968 it was legal to discriminate based on race, color, national origin, religion, sex, familial status or handicap in lending and many types of housing. In fact, in 1934 our own government, through the Federal Housing Authority, refused to insure mortgages in and around African American neighborhoods. The term “redlining” comes from this era when maps were made by Home Owners Loan Corporation and the Federal Housing Administration that were color coded red anywhere African Americans lived nearby, to indicate that the neighborhoods were to risky to insure.
Still today, homeowners will find discriminatory language in property deeds that has not yet been removed, such as language that says that owners are restricted from selling to “any person not of the Caucasian race,” and “ownership by negroes prohibited.” In 1948 the Supreme Court ruled that against these racially restrictive covenants and in 1968, upon the passing of the Fair Housing Act, they were outlawed, finally.
There is strong research that shows the intergenerational effects of wealth building for homeowners. The combination of lending prohibitions and covenants that prohibited sale to African Americans meant that African Americans could not participate in homeownership in many cases nor economically benefit from home appreciation over many generations.
The fact that discrimination in housing is still occurring today is a tragedy, given the economic consequences of paying higher mortgage rates, or being denied a loan altogether. If you find yourself a victim of discriminatory housing lending, rental or sale, or know of any instances of others being discriminated against, it’s important to report it.
How to report housing discrimination
The Department of Housing and Urban Development oversees fair housing and fair lending laws and takes complaints. It then refers cases to the Department of Justice for prosecution. There are also state and local agencies that enforce and who also take complaints.
To file a complaint with HUD:
To see lists of agencies that also enforce (bottom right corner of website):