Racial Discrimination in Housing

The Fair Housing Act (FHA) and the Equal Credit Opportunity Act (ECOA) are two major pieces of legislation created by the federal government that deal with discrimination in housing practices. While these laws are applicable to all states, most states have also implemented their own civil rights laws that protect against racial discrimination in housing and credit application processes. Before filing a lawsuit for racial discrimination in either of these areas, it is important to compare the federal law with your local laws to determine which will give you the highest protection.

History of the Fair Housing Act

The FHA, otherwise known as Title VIII of the Civil Rights Act of 1968, was first enacted to promote equal access to, and outlaw discrimination against, African Americans and other minorities in the sale or rental of housing. Before the act was passed, there had been pervasive discrimination in housing practices, which resulted in segregating minority communities into ghettos throughout the country. When enacted, the FHA prohibited a broad range of discriminatory housing practices on the basis of race, national origin, color, and religion.

The act has since been amended to include sex, disability, and familial status as protected groups. The federal agency in charge of enforcing the FHA is the Department of Housing and Urban Development (HUD). Since the enactment of the FHA, HUD has created many programs and policies to aid in the enforcement of the protections given by the act.

Protections Given By the Fair Housing Act

The FHA offers a wide range of protections against racial discrimination in the sale or rental of housing. Under the FHA, it is illegal for a landlord, real estate agent or seller to act in any of the following ways on the basis of race: refuse to sell or rent; refuse to make housing available; offer different terms, conditions, rates or prices; refuse to negotiate; or appraise the value of a home based on the racial makeup of the neighborhood. Under the act, it is also illegal for a mortgage broker to refuse to make a loan or create different terms or conditions for a loan based on race, sex, disability or familial status.

Other discriminatory actions outlined in the Fair Housing Act are practices known as “steering” and “blockbusting.” Blockbusting, which was practiced heavily just before the enactment of the FHA, was a practice in which a real estate agent or seller of a residence would induce white residents to move into suburban areas by telling them that another racial or ethnic group was moving into the area. Steering is when a landlord, seller or real estate agent advises people to rent or buy in a certain neighborhood based on their race.

The FHA also protects against government discrimination in housing. It is illegal for a local, state or federal government to deny zoning permits for racially-based reasons. For example, lawsuits have been brought against government entities for denying low-income housing permits in predominantly white neighborhoods when it was found that a higher ratio of minorities were in need of subsidized housing than whites were.

Exceptions to the Fair Housing Act

It is important to note that not every type of home seller or renter is bound by the Fair Housing Act. Exceptions to the FHA apply to most individuals that sell their homes without a real estate agent and any owner-occupied homes with four or less residential units. Further, private clubs and organizations that limit housing to their members are also exempt from the provisions of the act.

The Equal Credit Opportunity Act

The Equal Credit Opportunity Act (ECOA) was passed by Congress in 1974. The ECOA was enacted to expand the protections that the FHA gave in the area of loans and credit. Several government agencies share the responsibility for enforcing ECOA, depending on the type of institution that has been alleged to have violated the act. Upon request, the creditor is required to give you the agency responsible for enforcing the act for their type of business. The federal government also has a website (federalreserveconsumerhelp.gov) to help consumers find out which agency to contact for a suspected creditor violation.  

Protections Given by the Equal Credit Opportunity Act

The ECOA prohibits lenders from taking race into consideration when determining if an applicant is creditworthy. The ECOA also prohibits discrimination on the basis of national origin, color, religion, sex, marital status, or because an individual receives public assistance. The act applies to any business or individual that regularly engages in issuing credit, or making a decision about credit in the course of their business. This includes finance or loan companies, banks of any size, credit unions, credit card companies, and department or retail stores.

Situations that raise ECOA racial discrimination violations occur when a lender changes terms or conditions in credit or discourages or refuses someone credit on the basis of race. This does not mean that lenders cannot ask an applicant about this information, however. Questions about race, sex, or national origin are sometimes included in applications for loans or credit as a way for the federal agencies to help enforce anti-discrimination laws. However, if the lender takes race into consideration when making a credit decision, this is illegal.

Under the ECOA, lenders can take relevant factors into consideration when determining whether to issue credit or change the terms of a loan. Relevant factors include credit history, income, and debt. If you are denied a loan or other type of credit you have a right to know and a lender is required to provide you with the specific reasons for rejection. For example, an acceptable specific reason given may be, “your past credit history isn’t good enough to obtain this level of credit.” However, a vague reason such as “you failed to meet our company’s minimum standards” is not specific enough under the ECOA.

Getting Help

If you believe that you have been the victim of racial discrimination in the rental or sale of housing or in the application for credit or a loan, you should take action. Most states have their own versions of the FHA and ECOA. Further, state civil rights laws usually offer even greater protection and recovery for damages to a plaintiff who has been injured by a discriminatory housing or credit practice. Contact a civil rights attorney in your area for assistance. A civil rights attorney will guide you through the required administrative processes, determine if you should file in state or federal court, and help you file a lawsuit on your behalf.