Chapter 20: Fair Housing, ADA, Equal Credit, and Community Reinvestment - VERY IMPORTANT CHAPTER
1988 Amendment to Fair Housing Act
Amended the 1968 Civil Rights Act to provide for housing for the handicapped, as well as for people with children under the age of 18. Know all 7: provides for discrimination on the basis of race, color, religion, national origin, sex, familiar status or handicapped status.
Fair Housing Act
Federal law that creates protected classes from discrimination in connection with the sale or rental of housing or land offered for residential construction or use; also called Title VIII of Civil Rights Act of 1968. Those classes are: race, color, religion, sex, national origin, familiar status and physical handicap.
Civil Rights Act of 1866
Federal law that prohibits discrimination in buying, holding, or inheriting real estate; see Thirteenth Amendment - basically prohibits racial discrimination and is applicable to real estate transactions
State versus Federal laws
Georgia has a fair housing law that essentially mimics the federal legislation.
Thirteenth Amendment
prohibits slavery and involuntary servitude based on most significant case on discrimination, Jones v Alford H. Mayer Company - that case basically held that any form of racial discrimination, even by individuals, creates a "badge of slavery" which in turn results in the violation of the Thirteenth Amendment.
Fifth Amendment
states that no one can have their property taken from them without court proceedings.
Acts not prohibited by the 1968 Fair Housing Law
1. a broker is not used, 2. discriminatory advertising is not used, 3. no more than one house in which the owner was not the most recent resident is sold during any two-year period. Also, not covered by the 1968 Act is rental of rooms or units in owner-occupied multi-dwellings for 2 to 4 families IF discriminatory advertising is not used; does not cover the sale, rental or occupancy of dwellings that a religious organization owns or operates for other than commercial purpose to persons of the same religion if membership in that religious is not restricted on account of race, color, or national origin. It does not cover the rental or occupancy of lodgings that a private club owns or operates for its members for other than a commercial purpose; housing for the elderly for allow for discrimination in not permitting children or young adult occupants if housing is primarily intended for the elderly (55 or 62) AND meets HUD guidelines. NOTE HOWEVER THAT THE ABOVE LISTED ACTS NOT PROHIBITED BY THE 1968 FAIR HOUSING LAWS ARE PROHIBITED BY THE 1866 CIVIL RIGHTS ACT WHEN DISCRIMINATION BASED ON RACE OCCURS IN CONNECTION WITH SUCH ACTS.
ECOA Prohibited Requests
1. can only request info on spouse or former spouse when that person will be contractually obligated for repayment, 2. marital status, 3. source of income without disclosing that information regarding alimony, child support or separate maintenance (only at option of the applicant-the big exception is when the applicant expects to use any of those sources of income for repayment. If so, the lender may request this info; 4. birth control practice or intentions concerning the bearing or rearing of children, but lender can inquire about the number and ages of dependent children or dependent-related financial obligations; 5. question re: race, color, religion or national origins; minor exceptions apply when a real estate loan is involved.
handicapped
1. having a physical or mental impairment that substantially limits one or more life activities, or 2. having a record of such impairment, or 3. being regarded as having such an impairment. see 1988 amendment to Fair Housing Act. A builder does not have to build a building to be handicap accessible- no law says the builder has to put in an elevator - some buildings cannot accommodate an elevator. If it's a rental property, it does operate under providing handicap access, i.e. ground floor. A blind person can live with a guide dog in a housing project that prohibits pets. The handicapped are also allowed to make reasonable modifications to existing units as long as it's at the occupants expense. The landlord may require the tenant to restore the unit to its original condition upon termination of occupancy if the changes to the unit would not be conducive to renting to another tenant. (The book notes and John's input)
Housing covered under 1968 Fair Housing Law
1. single family houses owned by individuals when, a. an agent, broker, etc. is used and/or discriminatory advertising is used; 2. single family houses not owned by private individuals, 3. single family houses owned by a private individual who owns more than 3 such houses or who, in any two year period, sells more than one in which the individual was not the most recent resident, 4. multifamily dwellings of five or more units, 5. multifamily containing 4 or fewer units, if the owner does not reside in one of the units.
Fair Housing Enforcement
1. written complaint to HUD, 2. file court action in US District Court, 3. file a complaint with the US Attorney General. Regardless of the route, the burden of proving illegal discrimination is the responsibility of the person filing the complaint. If successful, 1. an injunction to stop the sale or rental to someone else which makes it available to the complainant, 2. money for actual damages caused by the discrimination, 3. punitive damages and 4. court costs. Also, there are criminal penalties for those who coerce, intimidate, threaten or interfere with a person's buying, renting, or selling of housing.
Exemptions to 1988 Amendment "familial status"
A building can be exempt for: 1. it provides housing under the stte or federal program that the Secretary of HUD determines is specifically designed and operated to assist elderly persons; 2. provides housing intended for and general occupied only by persons 62 years and older; 3. provides housing in which at least 80T of the units are occupied by at least one person 55 years of age or older and meets certain regulations that are adopted by the secretary of HUD. Fines begin at not more than $50,000 for first offense, $100,000 for subsequent offenses and not all inclusive. SIGNIFICANT IMPACT for real estate agents: it is unlawful to refuse to sell, rent, negotiate sale or rent of any property based on familial status or handicapped status. Again, a landlord cannot deny the right of a handicapped tenant to make any changes in the physical structure of the building, provided that the tenant agrees to reinstate the building to its original form upon departure. Review page 398 for 7 rules for agents under 1968 Fair Housing Law.
Protected class
A class of people that are protected from discrimination by laws
American with Disabilities Act
A federal law giving disabled individuals the right to access commercial facilities open to the public; as far as scope, commercial facilities must be accessible to the maximum extent feasible whenever alterations are being performed on the facility.
penalties
failure to comply with the ECOA or accompanying federal regulations make a creditor subject to civil liability of damages in $10,000 to $50,000or 1% of creditor's net worth in class actions.
Equal Credit Opportunity Act ECOA
federal law that provides for equal credit to borrowers; prohibits discrimination in any credit transaction based on race, color, religion, national origin, sex, marital status, age (not including minors), receipt of income from public assistance.
Tester
individual or organization that responds to advertising and visits real estate offices to test for compliance with fair housing laws
Credit Denial
lender must give a written notice of decline; reasons: inability to verify credit references, temporary or irregular employment, insufficient length of employment, insufficient income, excessive obligations, inadequate collateral, too short a period of residency, delinquent credit oblitation, incompleteness.
appraisals
lender or loan broker must make available a copy of an appraisal report to an applicant for a loan to be secured by a lien on the dwelling. Lender must promptly (within 30 calendar days) by mail or deliver the copy after he receives the borrower's request.
Agent's Duties
must uphold 1968 Fair Housing Law and the 1866 Civil Rights Act. If requested by property owner to discriminate, the agent must refuse to accept the listing. Agent is in violation of fair housing laws by giving a minority buyer or seller less than favorable treatment or by ignoring him or referring him to an agent of the same minority; when an agent fails to use best efforts or does not submit an offer because of race, color, religion, sex, national origin, handicap or familial status.
Evaluating credit applications
nothing considered to be illegally discriminatory; age, children, part-time income, alimony and child support, credit history. However, lender may consider an applicant's immigration status and whether or not applicant is a permanent resident of the US; sex but may ask applicant to designate a title on the application form (Mr., Miss, Mrs, or Ms); marital status. If an applicant applies for individual credit, the lender may not ask the applicant their marital status unless the applicant resides in a community property state or is relying on property located in a community property state to repay the loan. Again, lender can ask about the spouse or former spouse when the spouse will be permitted to use the account and/or is contractually liable on the account.
familial status
occurs when one or more individuals under the age of 18 are domiciled with a parent, or other person having custody ... related to family; also applies to pregnant women or anyone securing legal custody of any individual who has not obtained the age of 18 years. Most significant effect of this amendment is that all homeowners' association property, apt projects and condos now have to have facilities adapted for children and cannot discriminate against anyone on the basis of familiar status when leasing, selling or renting property
steering
practice of directing home seekers to particular neighborhoods based on race, color, religion, sex, national origin, handicapped or adults only status
Fourteenth Amendment
prohibits any STATE (as opposed to the federal government) from depriving a person of life, liberty or property without due process of the law and it prohibits any state from denying any person within its jurisdiction the equal protection of the laws. See Shelley v. Kraemer - white property owners attempting to enforce a deed restriction that required al property owners to be Caucasian. The Supreme Court concluded that the "equal protection" clause of the Fourteenth Amendment should prohibit the judicial enforcement by STATE courts of restrictive covenants based on race or color.
block busting
the illegal practice of inducing panic selling in a neighborhood for financial gain; can apply to racial / religious connotation or fears from an incoming expressway