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Legal Fur Could Fly As Evictions Collide With New Focus On FHA Enforcement

An end to the federal eviction moratorium at the end of the month and the Biden administration’s determination to reverse Trump-era weakening of fair housing requirements have the potential to stir up a legal cocktail that could leave some residents and landlords alike with a lingering hangover.

Attorneys and fair housing experts say two pending U.S. Department of Housing and Urban Development Fair Housing Act rollbacks — including restoration of the Affirmatively Furthering Fair Housing requirement former President Donald Trump painted as a suburb killer — could fuel a spate of legal action just as the pandemic safety net begins to unravel.


HUD published an interim final rule on June 10 restoring the AFFH. The requirement holds federal agencies and communities receiving grants accountable for actively working against discrimination in housing and urban development. On June 25, it moved to reimplement the 2013 discriminatory effects rule, another Trump target. That rule addresses policies that might appear neutral but have a discriminatory effect, which could include practices such as rejecting tenants on the basis of criminal history without asking for clarification or using algorithm-based technology to make leasing, marketing and zoning decisions.

“It is a new day at HUD,” HUD Secretary Marcia Fudge said late last month, announcing her agency would move to squash a 2020 Trump administration discriminatory effects rule change that would have made it harder for plaintiffs to prove discrimination by adding new pleading requirements, proof requirements and defenses to establish violations.

The Fair Housing Act changes, part of a suite of initiatives the Biden team has rolled out to tackle economic inequalities in housing and business, won high praise from fair housing advocates like Jesse Van Tol, CEO of the National Community Reinvestment Coalition, who called full implementation of the discriminatory effects standard a “cornerstone commitment to ending residential segregation and a key anti-redlining tool.”

Though the Fair Housing Act was passed more than 50 years ago, a June University of California-Berkley study shows racial segregation has worsened over the past 30 years, with 81% of the United States' largest metros growing more segregated by 2019 than they were in 1990. Poverty in communities of color sits at three times that of White communities (21% versus 7%) and household incomes in those communities hover at half that of White neighborhoods, according to the study.

The pandemic has only heightened existing divides, especially when it comes to who stays and who goes when landlords consider evictions. Even pre-pandemic, eviction rates were significantly higher for people of color and single mothers, and it has only gotten worse from there. An analysis of census data compiled by National Equity Atlas found that of the 6 million Americans behind on rent and most imminently at risk of eviction, 66% were people of color. 

As the federal eviction moratorium is set to expire at the end of this month and new direction comes from the highest level of government, experts representing both tenants and business interests expect to rack up more time in court.

“The pandemic brought evictions out of the shadows and into the forefront and we’re going to seize the opportunity to do everything we can to prevent an eviction cliff once moratoriums end,” HUD Senior Advisor on Rental Assistance Peggy Bailey said at a July 1 Fair Housing Training Academy webinar.

“Evictions are fair housing issues,” said Chancela Al-Mansour, an attorney and director of the Housing Rights Center in Los Angeles. She said Black renters are significantly more likely to face eviction than any other group, making up 21% of renters but 36% of those facing eviction in 2020. Latinx, Native American and low-income families are also at higher risk.

A renewed focus on disparate impact rather than disparate treatment means the bar will be lower on proving violations against eviction and fair housing rules going forward.

Disparate treatment refers to blatant discriminatory behavior such as racially charged comments from a landlord or policies that bar children from playing outside, effectively banning children, for instance. 

A disparate impact is one that “doesn’t appear to discriminate against anyone on its face, but when you apply that rule, it does severely impact one group more than another,” Al-Mansour said.

Morris, Manning & Martin principal and Chair of Litigation Practice Bonnie Hochman Rothell

Changes in the way the Fair Housing Act is implemented and enforced are expected to have a major impact on how landlords, multifamily developers and others do business, plan projects and market their properties as well.

Bonnie Hochman Rothell, partner and chair of litigation practice at the Washington, D.C., branch of Morris, Manning & Martin LLP, said she is already receiving threats of lawsuits to come. 

“People are getting creative with the application of the Fair Housing Act given the current climate,” she said.

Fall-out from that could impact property owners, mortgage lenders, insurers, real estate agents and public housing agencies, among others.

“The actual lawsuits have not arisen yet, but what I found as a litigator is when you have an economy that’s a little bit upside down as we do, people are looking to make claims,” Rothell told Bisnow. “We have been thinking for some time there was going to be this big uptick … it hasn't yet happened, fortunately, but there's definitely that threat lingering, so compliance and knowing what to look for is key to avoiding a claim down the road.”

Rothell said she expected renewed enforcement of fair housing requirements to collide with evictions in a major way.

“Tenants don't want to be evicted … so before they get evicted or get sued, they’ll try to come up with their own claim to muddy the waters to avoid the eviction or the foreclosure,” she said, adding that a similar situation arose during a down economy in the late 1990s when lender liability suits were commonplace as a way for mortgage holders to avoid default.

“So with the changes in how the Fair Housing Act is being looked at, it does make it an easier climate for somebody, even if they wouldn't prevail in the end, to at least get through the front door of a courthouse and withstand a motion to dismiss, which makes it harder on the project owner or the lender or whoever it is the claim is against,” she said.

Those in the commercial real industry need to think beyond obvious sales, lending or rental discrimination based on race, color, religion, national origin, family, disability or gender, and look carefully at impacts, however inadvertent. By way of example, Rothell said she is involved in a case involving poor internet access in a low-income rural area with a large Black population.

Though the claim does not specifically cite the Fair Housing Act, lack of basic infrastructure services could be a potential disparate impact violation.

“Once upon a time, basic needs included electricity and water and now, especially with virtual learning infrastructure, that also means internet accessibility, and it’s something that is being looked at under the Fair Housing Act,” she said, adding that impending evictions won’t be the only area ripe for new legal action coming out of the coronavirus pandemic.

“I think the Fair Housing Act is going to be implicated more and more with so much mobility, a lot of people buying new homes, a lot of people relocating and moving out of cities to new locations.”