Key Takeaways
- The Fair Housing Act prohibits discrimination in housing-related transactions based on 7 protected classes: race, color, religion, national origin, sex, familial status, and disability
- Redlining — refusing to lend in certain geographic areas based on racial or ethnic composition — is a serious Fair Housing Act violation
- Familial status protections apply to families with children under 18, pregnant women, and those seeking custody of children; housing for older persons (55+) is exempt
- Reasonable accommodation requires landlords and lenders to modify policies for disabled persons; reasonable modification allows physical changes to premises
- HUD enforces the Fair Housing Act and can impose civil penalties up to $100,000+ for repeat violations
- The Fair Housing Act applies to residential real estate transactions including sales, rentals, and financing
Fair Housing Act
The Fair Housing Act (Title VIII of the Civil Rights Act of 1968) prohibits discrimination in the sale, rental, and financing of housing. Amended significantly in 1988, it's a cornerstone of fair lending law.
Purpose and History
The Fair Housing Act was enacted to:
- Eliminate discrimination in housing
- Promote integration and fair housing choices
- Ensure equal access to the American dream of homeownership
Key Timeline
| Year | Event |
|---|---|
| 1968 | Fair Housing Act enacted (race, color, religion, national origin) |
| 1974 | Sex added as protected class |
| 1988 | Familial status and disability added; enforcement strengthened |
The 7 Protected Classes
The Fair Housing Act prohibits discrimination based on:
| Protected Class | Coverage |
|---|---|
| Race | All racial groups |
| Color | Skin color distinctions |
| Religion | Religious beliefs and practices |
| National origin | Country of birth, ancestry, ethnicity |
| Sex | Male, female, gender identity, sexual orientation (per 2021 HUD interpretation) |
| Familial status | Families with children under 18, pregnant women, those obtaining custody |
| Disability | Physical or mental impairment substantially limiting major life activities |
Comparison: Fair Housing Act vs. ECOA
| Fair Housing Act | ECOA |
|---|---|
| 7 protected classes | 9 protected classes |
| Housing transactions only | ALL credit transactions |
| Includes familial status, disability | Includes marital status, age, public assistance, TILA rights |
| Enforced by HUD | Enforced by CFPB and other agencies |
Prohibited Practices
In Residential Real Estate Transactions
The Fair Housing Act prohibits discrimination in:
| Activity | Examples of Violation |
|---|---|
| Selling or renting | Refusing to sell/rent based on protected class |
| Terms and conditions | Charging higher rent to minorities |
| Advertising | "No children" or religious preferences in ads |
| Representing availability | Telling minorities a home is sold when it isn't |
| Blockbusting | Inducing panic selling based on changing neighborhood demographics |
In Residential Real Estate Financing
MLOs must be especially aware of these prohibited practices:
| Practice | Description |
|---|---|
| Redlining | Refusing to lend in certain areas based on racial composition |
| Steering | Directing applicants to certain neighborhoods based on protected class |
| Discriminatory underwriting | Applying different standards based on protected class |
| Discriminatory pricing | Charging higher rates or fees to protected groups |
| Denial based on neighborhood | Using racial composition as underwriting factor |
Redlining: A Critical Concept
Redlining is the practice of denying or limiting financial services to certain neighborhoods based on the racial or ethnic composition of those areas.
Examples of Redlining:
- Refusing to take applications from certain zip codes
- Applying stricter requirements for minority neighborhoods
- Not marketing or providing services in certain communities
- Drawing "red lines" around neighborhoods where loans won't be made
Modern Redlining Indicators:
- Lack of branch locations in minority areas
- Different loan products offered by neighborhood
- Higher denial rates unexplained by credit factors
- Less favorable terms in minority communities
Familial Status Protections
Familial status was added in 1988 to protect families with children.
Who Is Protected
| Protected | Examples |
|---|---|
| Families with children under 18 | Biological, adopted, step-children |
| Pregnant women | Current pregnancy |
| Those obtaining custody | Legal custody, foster care |
| Designee of parent | Grandparent with permission |
Housing for Older Persons Exemption
Properties qualify for exemption from familial status requirements if:
| Exemption Type | Requirements |
|---|---|
| 62+ housing | 100% of occupants 62 or older |
| 55+ housing | At least 80% of units have one occupant 55+ AND housing is intended/designed for older persons |
Disability Protections
The 1988 amendments added significant protections for persons with disabilities.
What Qualifies as Disability
A disability is a physical or mental impairment that substantially limits one or more major life activities, including:
- Walking, seeing, hearing, speaking
- Breathing, learning, working
- Caring for oneself
Reasonable Accommodation
Landlords and lenders must make reasonable accommodations — changes to rules, policies, or services:
| Examples |
|---|
| Allowing service/emotional support animals despite "no pets" policy |
| Providing reserved parking near entrance |
| Allowing live-in aide |
| Flexible payment schedules |
Reasonable Modification
Persons with disabilities may make reasonable modifications to premises at their own expense:
| Examples |
|---|
| Installing grab bars |
| Widening doorways |
| Building ramps |
| Lowering countertops |
Advertising Standards
Fair housing advertising rules are strict:
Prohibited Language
| NOT Permitted | Permitted |
|---|---|
| "No children" | "2-bedroom apartment" |
| "Christian home" | "Near churches and synagogues" |
| "Singles only" | "One-bedroom unit" |
| "Able-bodied persons" | "Third-floor walkup" |
| "English speakers only" | Property description facts |
Equal Housing Opportunity Logo
All real estate advertising should include the Equal Housing Opportunity logo or statement, indicating compliance with fair housing laws.
Enforcement and Remedies
HUD Enforcement
The Department of Housing and Urban Development (HUD) enforces the Fair Housing Act:
| Process | Description |
|---|---|
| Complaint filing | Must be filed within 1 year of violation |
| Investigation | HUD investigates and attempts conciliation |
| Charge issuance | If reasonable cause found, HUD issues charge |
| Administrative hearing | Before HUD ALJ, or can elect federal court |
Civil Penalties
| Violation | Maximum Penalty |
|---|---|
| First violation | Up to $21,663 (2025, adjusted annually) |
| Second violation (within 5 years) | Up to $54,157 |
| Third+ violation (within 7 years) | Up to $108,315 |
Private Lawsuits
Victims can file private lawsuits in federal or state court:
- Actual damages — Out-of-pocket losses
- Compensatory damages — Emotional distress, humiliation
- Punitive damages — No statutory cap
- Attorney's fees — Reasonable fees and costs
- Injunctive relief — Court orders to stop discrimination
DOJ Involvement
The Department of Justice can bring cases involving:
- Pattern or practice of discrimination
- Discrimination of general public importance
- Criminal referrals for interference with fair housing rights
Key Takeaways
- Fair Housing Act protects 7 classes: race, color, religion, national origin, sex, familial status, disability
- Redlining (refusing to lend based on neighborhood demographics) is a serious violation
- Familial status protects families with children; 55+ housing has exemption requirements
- Disability protections require reasonable accommodation and modification
- HUD is the primary enforcement agency with civil penalty authority
- Private lawsuits allow unlimited punitive damages
A lender applies stricter underwriting criteria to loan applications from predominantly minority neighborhoods. This practice is known as:
Which protected class is covered by the Fair Housing Act but NOT by ECOA?
A housing community wants to restrict occupancy to persons 55 and older. To qualify for the familial status exemption, what percentage of units must have at least one occupant 55 or older?