For Immediate Release - January 31, 2012

Brief Filed with U.S. Supreme Court Supports Disparate Impact Claims Under the Fair Housing Act

AG Highlights Discriminatory Lending Practices in Settlements with Mortgage Companies

BOSTON – Arguing that individuals and businesses involved with the renting or selling of homes must be held accountable for the discriminatory effects of their policies and practices, Attorney General Martha Coakley has filed a brief in the U.S. Supreme Court urging it to recognize disparate impact claims under the federal Fair Housing Act (FHA). The brief was joined by eleven other states: Arizona, California, Connecticut, Hawaii, Nevada, New Mexico, New York, Ohio, Oregon, Utah, and West Virginia.

The brief highlights the recent experience of Massachusetts and other states in pursuing disparate impact claims against banks and mortgage companies such as Option One, Countrywide, and Wells Fargo that made subprime home mortgage loans.  A disparate impact claim may be pursued when a policy that appears to be objective or neutral leads to results that are unfairly biased. For instance, the cases involving the subprime lenders challenged seemingly neutral policies that  in actuality caused African-American and Hispanic borrowers to pay hundreds, if not thousands, of dollars more for their loans than comparable white borrowers. 

“Based on our experience enforcing anti-discrimination laws, we believe disparate impact claims remain an essential tool in eradicating discrimination and segregation in the housing market—two foundational purposes of the FHA,” said AG Coakley. “Policies and practices that negatively affect minority groups can be just as harmful as intentional discrimination.”

The brief was submitted in the case of Magner v. Gallagher (10-1032) that is scheduled for argument on February 29, 2012. The Supreme Court granted certiorari, or judicial review, on two questions:

(1)  whether disparate impact claims are recognized under the FHA;

(2)  and if so, what method should be utilized to analyze such claims. 

AG Coakley’s brief contends that such claims are recognized and that the burden-shifting test, a standard utilized in employment discrimination cases and proposed by the U.S. Department of Housing & Urban Development (HUD) to apply in housing cases, should be utilized for FHA claims.

Courts of Appeals have been unanimous in recognizing disparate impact claims under the FHA and most have applied some version of the burden-shifting test. 

The FHA was enacted in 1968 and amended in 1988. It protects individuals from discrimination in the sale and rental of housing on the basis of race, color, gender, national origin, disability, religion, and familial status. The AG’s Office vigorously prosecutes violations of the FHA as well as the state housing discrimination law, G.L. c. 151B.   

Assistant Attorneys General Jonathan Miller, Erika Rickard, and Omar Gonzalez-Pagan, all of the Attorney General’s Civil Rights Division, as well as Maura Healey, Chief of the Civil Rights Division, assisted in the drafting of the AG’s Brief. 

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