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The Fair Housing Act: Anti-Discrimination Laws for Renters & Buyers

Like millions of American homeowners looking to take advantage of low interest rates during the COVID-19 pandemic, Florida homeowners Abena and Alex Horton decided to refinance their mortgage. In June 2020, their lender sent a professional appraiser to their home in a predominantly white area of Jacksonville, according to The New York Times.

Homes in the Hortons’ well-to-do neighborhood typically sell for $350,000 to $550,000. They expected theirs to appraise for about $450,000, a comfortable midpoint.

It didn’t. The appraiser pegged the value at just $330,000, well under the going market price for comparable homes nearby.

To its credit, the Hortons’ lender agreed that the appraisal was too low and ordered another. It came in at $465,000, in line with the homeowners’ expectations.

The Hortons didn’t undertake any last-minute home improvement projects or even take steps to improve the home’s curb appeal in the interim. They made only one change: removing any evidence that a Black person lived in the house. Before the appraiser arrived, Abena, who is Black, took her son shopping. She replaced mantel photos of her and her son with images of Alex, who is white, and white members of his family. She removed holiday cards from Black families. She even took books by prominent Black authors like Toni Morrison off the shelves.

The ordeal was humiliating but not surprising.

“I [knew] what the issue was,” Abena told the Times. “And I knew what we needed to do to fix it, because in the Black community, it’s just common knowledge that you take your pictures down when you’re selling the house. But I didn’t think I had to worry about that with an appraisal.”

The Hortons’ low appraisal was neither a fluke nor the work of a rogue, racist appraiser. The family’s experience plays out in countless households of color across America more than a half-century after the passage of federal civil rights legislation intended to protect minority homeowners from discrimination.

That law, the Fair Housing Act, was a vital component of a larger package of legislation meant to build upon the Civil Rights Act of 1964. The Fair Housing Act explicitly prohibits certain types of discrimination in the sale and rental of housing and mortgage lending against members of certain protected classes.

Subsequent legislation and court decisions have strengthened and expanded the act in meaningful ways.

Unfortunately, as the Hortons’ experience shows, the Fair Housing Act did not usher in a world free from housing discrimination. Indeed, the National Fair Housing Alliance’s 2019 Fair Housing Trends Report recorded more than 31,000 housing discrimination complaints in 2018, an 8% increase from 2017 and the highest figure since the National Fair Housing Alliance began tracking housing complaints in 1995. About three-quarters of these complaints were filed with nonprofit housing organizations compared with just under 6% filed with the U.S. Department of Housing and Urban Development (HUD). Many involve more egregious infractions than the Hortons’ lowball appraisal, such as the outright denial of rental housing or discriminatory mortgage lending practices that increase foreclosure risk and cost affected borrowers tens or hundreds of thousands of dollars over the life of a loan.

It’s true that not all Americans experience housing discrimination. But all Americans, even the housing-insecure, participate in the country’s housing market. And any unequal treatment, whether localized or widespread, distorts that market. That makes discrimination a collective problem, even when it doesn’t directly affect us as individuals.

Key Fair Housing Act Protections for Renters & Buyers

The Fair Housing Act protects most homebuyers, mortgage applicants, and renters from discrimination on several bases (protected classes), including race and sex. The act prevents landlords, sellers, selling agents, and housing lenders from taking specific actions defined as discriminatory against members of its protected classes.

Certain identities not explicitly mentioned in the act, notably gender identity and sexual orientation, can be — subject to judicial interpretation — covered by explicit protections of the act, such as sex and disability status (which covers chronic health conditions like AIDS and the virus that causes it). Likewise, many states have enacted laws that expand and complement provisions of the federal law. However, the Fair Housing Act does have important exemptions that limit its applicability in certain situations, such as owner-occupied or unmarketed small-scale rental housing.


Protected Classes Defined by the Fair Housing Act

The Fair Housing Act’s protections extend to members of the following protected classes or identities. These protections cover both explicit and indirect or implicit discrimination.

  • Race or Color. This protection applies to official Census-recognized racial categories: white American, Asian American, Black or African American, Native American and Alaska Native, Native Hawaiian and other Pacific Islander, Hispanic or Latino of any race, and people of two or more races. It also applies to informal racial or ethnic categories and perceptions thereof, such as assumptions made based on a person’s dialect or accent. An offender need not definitively know the race of a buyer or renter to discriminate against them based on it.
  • Religion. The Fair Housing Act requires equal treatment of members of all religious groups, including nonbelievers. For example, in most cases, an apartment community or municipality can’t advertise itself using religious labels like “Christian” or “Jewish.”
  • National Origin. The Fair Housing Act prohibits activities that favor or disfavor buyers, renters, or borrowers based on national origin. For example, while it’s not illegal under federal law for landlords to ask applicants for proof of United States citizenship or legal residency, it is unlawful to do so only for certain applicants.
  • Familial Status. This protection prohibits discrimination based on family organization and (in most cases) age. For example, a landlord who prefers not to rent to college students can’t simply deny housing to all applicants under age 23. Though the Fair Housing Act does not explicitly protect LGBTQ Americans from discrimination, the familial status class does include same-sex couples.
  • Sex. Any unequal treatment based on sex is prohibited under the Fair Housing Act. That includes restrictive policies enacted in the name of safety, such as refusing to rent first-floor walkout apartments to single women. It also covers any form of sexual harassment or coercion during the rental or sale process.
  • Disability. This protection covers individuals with significant documented disabilities, whether physical or cognitive. That includes those with chronic addiction disorders, such as alcoholism or substance abuse disorder, provided they’re engaged in treatment or recovery programs. Those engaged in the sale or rental of housing can’t ask about perceived disabilities or deny housing to those with disabilities. That’s true even when the offender’s intentions are pure, such as preemptively asking a person in a wheelchair if they require a first-floor apartment. Also, in rental housing, disabled tenants must be permitted to make reasonable improvements at their expense, and public areas and entryways must be accessible.

Explicit Prohibitions of the Fair Housing Act

The Fair Housing Act explicitly prohibits dozens of specific actions taken against members of any protected class by landlords, sellers, real estate agents and brokers, mortgage lenders, leasing agents, public officials, civil service, and insurance professionals. Some of these prohibitions pertain specifically to the sale or rental of housing, while others apply in the narrower mortgage lending context.

Actions Prohibited in the Sale or Rental of Housing

These actions include both egregious violations, as when a property management company posts a sign outside an apartment community’s leasing office restricting applications to a particular race, gender, or sexual orientation. But they also include more subtle offenses, such as when a real estate agent steers nonwhite buyers away from predominantly white neighborhoods.

Bear in mind that some of these actions, such as evicting a tenant, may be legal when the intent or result is not discriminatory. For example, a landlord is within their rights (subject to local regulations) to evict any tenant who’s fallen seriously behind on their rent as long as they treat all such tenants equally regardless of membership in a protected class.

Prohibited actions are:

  • Outright refusal to rent or sell housing
  • Refusing to negotiate the sale or rental of housing
  • Refusing to confirm housing is available for sale or rent
  • Discouraging the sale or rental of housing
  • Segregating housing (for example, grouping tenants of the same ethnic or racial group on a specific floor or building or in a specific neighborhood)
  • Extending favorable terms or unique incentives (for instance, charging opposite-sex couples lower rent than same-sex couples)
  • Making mention of any prohibited preference (for example, “families preferred”) in housing advertisements
  • Using different applications, screening or qualification criteria, or qualification processes (such as running credit checks for nonwhite applicants only)
  • Harassing applicants, tenants, or occupants or conditioning approval of a housing application on the applicant’s response to harassment
  • Evicting tenants or guests
  • Delaying or declining to make necessary repairs or maintenance
  • Offering property insurance on unequal terms (for example, asking higher premiums from members of certain protected classes, though underwriters may use indirect methods like credit scoring to account for higher perceived risk from certain occupants)
  • Profiting or attempting to profit by persuading homeowners to sell because members of a particular protected class are moving nearby
  • Denying real estate agents or brokers access to local agent organizations or multiple listing services

Actions Prohibited in Mortgage Lending

These actions also include a mix of egregious and subtle violations. However, all involve lenders’ or loan servicing companies’ refusal to treat mortgage applicants or borrowers equally based on their identities.

  • Refusing to provide information about loan opportunities
  • Refusing to originate mortgage loans to otherwise qualified applicants
  • Refusing to provide other financial assistance to otherwise qualified applicants
  • Offering unequal terms or conditions — such as higher rates, fees, or points — on mortgage loans
  • Discriminating during the appraisal process
  • A secondary lender or loan servicing company refusing to purchase a home loan
  • Conditioning issuance of a loan on the applicant’s response to harassment or coercion

HUD’s fair lending guide has more detail on mortgage applicants’ rights and mortgage lenders’ obligations under the law.

Actions Prohibited in All Housing-Related Contexts

These actions are prohibited in all housing-related contexts:

  • Threatening, intimidating, or otherwise interfering with anyone attempting to exercise their rights under the Fair Housing Act or assist others in doing so
  • Retaliating against anyone who has filed a fair housing complaint or assisted with a fair housing investigation

State & Federal Housing Protections for LGBTQ Individuals

As written, the Fair Housing Act does not explicitly forbid housing discrimination based on sexual orientation, sexuality, or gender identity. However, HUD requires lenders insured by the Federal Housing Administration (a HUD agency) to observe its Equal Access Rule, which prohibits certain acts of lending discrimination based on sexual orientation.

Additionally, the Fair Housing Act effectively forbids discrimination against LGBTQ individuals or families in circumstances covered by other bases. And many state laws explicitly prohibit housing discrimination against members of the LGBTQ community.

Common Examples of Anti-LQBTQ Housing Discrimination Covered by the Fair Housing Act

The Texas Access to Justice Foundation-funded TexasLawHelp.org highlights common examples of circumstances in which explicit Fair Housing Act protections extend to LGBTQ individuals:

  • Sex Discrimination. A rental housing operator asks a transgender woman not to dress in women’s clothing in her building’s common areas; a property manager refuses to rent to a gender-nonconforming applicant.
  • Disability Discrimination. A landlord evicts a gay man whose HIV or AIDS status qualifies as a disability under the Fair Housing Act.
  • Equal Access Rule. A mortgage lender denies a loan to two same-gender co-applicants presumed to be a couple.

State Laws Protecting LGBTQ Individuals From Housing Discrimination

HUD maintains a list of states with laws prohibiting housing discrimination based on sexual orientation, gender identity or expression, or both. Jurisdictions that forbid housing discrimination on both bases include:

  • California
  • Connecticut
  • Colorado
  • Delaware
  • Hawaii
  • Illinois
  • Iowa
  • Maine
  • Maryland
  • Massachusetts
  • Minnesota
  • Nevada
  • New Jersey
  • New Mexico
  • New York
  • Oregon
  • Rhode Island
  • Utah
  • Vermont
  • Washington, D.C.
  • Washington state

New Hampshire and Wisconsin prohibit housing discrimination based on sexual orientation but not gender identity or expression.


Noteworthy Fair Housing Act Exemptions

The Fair Housing Act covers most housing types and the vast majority of housing units available for sale or rent in the U.S. However, it does have important exemptions and carve-outs for certain housing types:

  • Small-Scale Rental Housing. Owner-occupied rental properties with four or fewer units (such as duplexes and quadplexes) and single-family rental housing that is not marketed or rented with help from a real estate broker. In the latter case, the exemption does not apply when the property’s owner owns more than three qualifying properties.
  • Housing Operated by Exempt Organizations. This category includes housing operated by legally recognized religious organizations or private clubs that limit eligibility to their own members.
  • Senior Housing. Multifamily communities that meet one of two criteria may legally deny housing to younger applicants: a) every resident is 62 or older or b) at least 80% of occupied units have at least one resident age 55 or older.

Why the Fair Housing Act Matters Today

It’s clear from the massive (and growing) volume of fair housing complaints tabulated by the National Fair Housing Alliance — to say nothing of the acts of housing discrimination that go unreported — that the Fair Housing Act remains necessary and relevant to modern renters and homebuyers.

Though egregious examples of overt housing discrimination still occur, modern examples tend to be subtle, even covert. Modern housing discrimination often occurs without victims’ knowledge, and sometimes without agency or intent on the perpetrator’s part. The Hortons’ first appraiser might well have acted on unconscious bias — an internalized, unquestioned notion that Black-owned homes are less desirable than white-owned homes — rather than conscious animosity toward people of color or an explicit directive from their employer.

All Americans, even those who believe they’ve never experienced housing discrimination and aren’t at risk from it in the future, need to understand what housing discrimination looks like in practice and recognize the financial, economic, and social consequences it can wreak. These consequences can and do affect all Americans’ personal finances and overall well-being — whether directly (through actual acts of discrimination) or indirectly (by harming local economies and fraying the social fabric). For example, the subprime mortgage crisis of the late 2000s — fueled in part by discriminatory lending practices that resulted in higher rates of default by borrowers of color — resulted in millions of job losses, including those of many Americans who didn’t apply for a mortgage before or during the crisis.


Real-World Examples of Housing Discrimination

Theoretical examples from HUD and nonprofit fair housing organizations like the National Fair Housing Alliance provide a basis for public understanding of the various forms of housing discrimination.

Sadly, these theoretical examples have far too many real-world analogs, such as big banks diverting borrowers of color into more expensive home loans, multifamily housing operators violating the Americans With Disabilities Act, and municipalities enforcing discriminatory housing ordinances. Four of these five examples occurred (or continued) during the 2010s. The fifth was a widespread historic ill that profoundly influenced America’s urban geography.

  • Disability-Based Discrimination in Dozens of Multifamily Housing Communities. In 2019, the U.S. Department of Justice (DOJ) reached a civil settlement with multistate apartment community operator Miller-Valentine Operations Inc. and Affiliates. According to the DOJ, the company stood accused of violating disability protections enshrined in the Fair Housing Act and the Americans With Disabilities Act. Under the terms of the settlement, the DOJ required the operator to “take extensive corrective actions” to improve accessibility at more than 80 properties in more than a dozen states and establish a $400,000 fund to compensate disabled individuals affected by its violations.
  • Illegal Lending in Sacramento and Philadelphia. Banking giant Wells Fargo has been accused of discriminatory lending practices by federal, state, and local authorities since at least the 2000s. The bank agreed to pay more than $230 million in 2012 to settle a DOJ civil action alleging a “pattern and practice” of lending discrimination against Black and Latino borrowers from 2004 to 2009. In 2017, the city of Philadelphia sued Wells Fargo over similar claims. The bank settled for $10 million in 2019, according to the Philadelphia Inquirer. A similar lawsuit filed by the city of Sacramento, California, in 2018 (per CNN) remains pending.
  • Racially Discriminatory Housing Ordinance and Enforcement. In 2019, the DOJ sued the city of Hesperia, California, and the San Bernardino Sheriff’s Department alleging that a city ordinance and its enforcement constituted discrimination against Black and Latino renters, according to U.S. News. A HUD investigation found that enforcement of the ordinance resulted in more than 140 evictions over alleged criminal conduct in 2016. In some cases, entire families were evicted over allegations leveled at a single tenant or guest. Enforcement disproportionately targeted minority neighborhoods, with Black tenants 4 times as likely to face eviction as white tenants.
  • Refusal to Rent to Same-Sex Couple. In 2017, a federal court ruled that the denial of rental housing to a same-sex Boulder, Colorado, couple constituted prohibited discrimination under the Fair Housing Act and applicable state law. According to Lambda Legal, the property owner refused to rent to the couple over concerns that doing so would harm her standing in the community.
  • Racially Restrictive Covenants. Restrictive covenants are clauses in housing deeds that restrict future homeowners’ activities and are not in and of themselves illegal. However, one particular type of restrictive covenant has long been rendered unenforceable by state and federal law: racially restrictive covenants that forbade homeowners from selling to buyers of certain races or nationalities (often simply anyone who was not white). According to Mapping Prejudice, racially restrictive covenants were common in the first half of the 20th century in cities like Minneapolis, Chicago, Seattle, and the Kansas City metropolitan area. Where widespread, racially restrictive covenants — often in conjunction with redlining, a common lending practice that diverted nonwhite borrowers into specific neighborhoods — contributed to profound housing segregation. These practices helped create majority-minority neighborhoods that subsequently experienced ills including disinvestment, neglect, and civil unrest.

Potential Consequences of Housing Discrimination

Real-world housing discrimination, past and present, has real-world consequences for homeowners, renters, and their communities. Some are direct, such as harmful effects on victims’ long-term wealth-building capacity. Others, while indirect, can be more devastating at scale. Generations on, many cities continue to grapple with the far-reaching consequences of early-to-mid-20th century redlining and restrictive covenants.

  • Greater Exposure to Environmental Health Risks. High-profile calamities like the lead drinking water crises in Flint, Michigan, and Newark, New Jersey, underscore the disproportionate environmental health risks faced by low-income communities (especially communities of color, like Flint and Newark). This isn’t merely a media narrative. A 2018 Environmental Protection Agency study found that people of color are more likely to live near sources of air pollution and breathe polluted air, often due to historical settlement patterns influenced by redlining and restrictive covenants. A 2016 study published in Environment International found that long-term exposure to particulate matter correlates directly with housing segregation. That is, residents of highly segregated areas inhale more particulate matter than those in less segregated areas.
  • Lead Exposure in Older Housing Stock. Naturally occurring affordable housing (and often, subsidized housing available through programs like the Section 8 voucher scheme) tends to be older. Unfortunately, many older homes still contain lead paint or lead water service lines (which are typically benign but can cause problems when drinking water is not properly treated, as occurred in Flint). Lead exposure can cause a host of serious health and developmental problems in children, according to the Centers for Disease Control and Prevention.
  • Inadequate Nutrition. Because the market opportunity is greater in moderate- to high-income areas, full-service grocery stores with well-stocked produce sections tend to favor these places over low-income neighborhoods. The U.S. Department of Agriculture’s food access atlas shows regions that qualify as “food deserts” with limited nutritional resources. These places often occur in low-income urban neighborhoods and small rural towns served primarily by corner stores and dollar stores with little if any fresh produce.
  • Higher Incidences of Gun Violence and Other Serious Crime. According to a 2019 study published in PLOS Medicine, gun violence incidence closely correlates with higher rates of poverty and income inequality, low rates of social mobility, and low levels of trust in public institutions— ills exacerbated by the legacy of residential segregation. For example, a 2018 mapping project by The Trace found that two low-income neighborhoods in highly segregated Cincinnati accounted for a disproportionate share of that city’s shootings.
  • Unequal Access to Quality Schools. A 2016 study by EdBuild found a $23 billion funding gap between mostly white and mostly nonwhite school districts. The gap is caused in part by districts’ heavy reliance on local taxes (which generate more revenue in wealthier, predominantly white districts) and the principle of “local control,” which limits equitable distribution of state education funds to poorer districts. This gap contributes to unequal educational outcomes, which in turn reinforce the very racial wealth disparities responsible for it.

Whether directly or indirectly, housing discrimination can also affect buyers, renters, and borrowers who believe they’re not at risk of overt discrimination. These harmful effects include macroeconomic damage brought about by biased lending and appraisal practices and social polarization caused by long-standing racial and ideological segregation.

  • Impact of Discriminatory Lending on the Broader Economy. A 2010 study published in the American Sociological Review cited a “highly racialized process” of “differentially market[ing] risky subprime loans” to borrowers of color as a cause of the late-2000s subprime mortgage crisis that precipitated the Great Recession — a stark example of the potential for discriminatory lending to negatively impact the broader economy. On a more granular level, Federal Financial Institutions Examination Council data cited by the Center for American Progress found that home prices in predominantly Black neighborhoods decreased by 6% between 2006 and 2017. During the same period, home prices in majority-white neighborhoods increased by 3%. This divergence disadvantages all homeowners in affected neighborhoods, not just members of the area’s ethnic or racial minority.
  • Increasing Racial and Cultural Tension. In a 2019 Pew study — conducted before widespread protests over police violence in 2020 — some 58% of all Americans and 71% of Black Americans said race relations were “bad” in the U.S. Meanwhile, 65% of all Americans said it had “become more common for people to express racist or racially insensitive views” since Donald Trump was elected president, while 45% said it had “become more acceptable” to do so. While it might give comfort to characterize this as an aberration attributable solely to a particular political leader or party, that’s not the entire story. Indeed, these alarming figures spotlight a fraying of the American social fabric caused in part by decades of residential segregation. According to a Washington Post visualization, despite incremental integration since 2000, most Americans continue to live in “majority” neighborhoods where one racial or ethnic group predominates. A 2017 Harvard University study found that roughly 69% of the U.S. population lived in majority-white neighborhoods between 2011 and 2015.
  • Political Polarization and Increased Mistrust of Institutions. Residential segregation also exacerbates political polarization and public mistrust of institutions. Writing for Bloomberg CityLab shortly before the 2016 U.S. presidential election, urban studies professor Richard Florida noted that geography was increasingly predictive of political affiliation. Democratic voters cluster in cities and inner suburbs and Republican voters favor lower-density geographies, creating bubbles of relative ideological homogeneity. Such “sorting” often manifests in antagonistic relations between local and state leaders, which came to a head during the COVID-19 pandemic in states including Texas and Wisconsin, per Politico. It also leads to dysfunction in state and federal governments and coarsening public discourse. A 2016 study by researchers at the University of Mississippi and Stony Brook University, SUNY found that the percentage of positive political ads declined from 90% during the 1960 U.S. presidential campaign to less than 15% during the 2012 presidential campaign).

Final Word

Selecting the “best” neighborhood is a fundamental part of the process of finding new housing. Every prospective renter and homebuyer gives some thought to the characteristics of the communities they consider moving to and ranks them based on priorities like access to quality schools, open space, or urban amenities.

Few prospective renters and homebuyers give conscious thought to why certain communities have characteristics that make them desirable. That’s understandable. The exercise is a discomfiting one, but it’s also necessary.

Have you or someone you know ever experienced (or suspected) housing discrimination?

Brian Martucci
Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he's not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.

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