TheMReport — News and strategies for the evolving mortgage marketplace.

Issue link:

Contents of this Issue


Page 39 of 67

38 | Th e M Rep o RT o r i g i nat i o n s e r v i c i n g a na ly t i c s s e c o n da r y M a r k e t ORIGINATION the latest supreme court Hears disparate impact arguments At issue is whether the Fair housing Act permits actions that unintentionally harm high-minority or low-income neighborhoods. M embers of the U.S. Supreme Court convened to spar with attorneys—and each other—in a case that could narrow long-held interpretations of a federal law barring housing discrimination. The key point in the case is whether or not the Fair Housing Act, passed in 1968, permits lawsuits against practices that unintentionally create a negative effect for minori- ties, a legal theory otherwise known as "disparate impact." The case stemmed from a dispute in Texas revolv- ing around federal tax credits awarded to developers working in low-income areas. Inclusive Communities Project, a non- profit working to promote racial integration, sued the Texas Department of Housing and Community Development in 2008, arguing the credits gave incentive for companies to keep to high-minority areas, thus limiting affordable options for low-income residents. In oral arguments before the court, state Solicitor General Scott Keller focused on the specific language of the Fair Housing Act, which includes narrower phras- ing than other anti-discrimination laws enacted at the time. The court's liberal justices were skeptical, reasoning that Congress' goal was broad-based. "[The Fair Housing Act's] ob- jective was to replace ghettos by ... integrated living patterns," said Justice Ruth Bader Ginsburg. "So doesn't that purpose give a clue to what Congress was after?" Justice Stephen Breyer also questioned the strength of the state's argument, especially when previous rulings around the country have supported dispa- rate impact claims. "[T]his has been the law of the United States uniformly through- out the United States for 35 years, it is important, and all the hor- ribles that are painted don't seem to have happened, or at least we have survived them," Breyer said. "So why should this court suddenly come in and reverse an important law which seems to have worked out in a way that is helpful to many people?" Nevertheless, Keller main- tained that past interpretations of the law have been too loose, asserting "the purposes of the Fair Housing Act would be un- dermined by extending disparate impact liability to this degree." The conservative justices on the court agreed to a large extent, bringing up questions of how a policy's effect can be determined as good or bad. To illustrate that point, Chief Justice John Roberts used an example of two propos- als: one to build new housing in a low-income area to benefit minorities, and the other to build affordable housing in an affluent area to promote integration. "Which is the bad thing to do, not promote better housing in the low-income area or not promote housing integration?" Roberts asked. The unknown variable in the case is Justice Antonin Scalia, who seemed to waver back and forth. On the one hand, Scalia argued to Keller that Congress' actions to create disparate impact exemptions in 1988 add validity to the case that some practices can create uninten- tional discriminatory effects. On the other hand, in an ex- change with Michael Daniel, an attorney representing Inclusive Communities Project, he made the point that "[r]acial disparity is not racial discrimination." "The fact that the NFL is largely black players is not discrimination," he said. "Discrimination requires inten- tionally excluding people of a certain race." Analysts anticipate a decision in the case by July.

Articles in this issue

Archives of this issue

view archives of TheMReport - MReport_March_2015