UNIT 5 - FAIR HOUSING LAWS
STEERING
Encouraging buyers to limit search to particular neighborhoods based on factors such as race and religion
PROTECTED CLASSES
FAIR HOUSING ACT OF 1968: National origin, color, religion, race HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1974: Sex, national origin, color, religion, race CIVIL RIGHTS ACT OF 1866: Color, race FAIR HOUSING AMENDMENTS ACT OF 1988: Familial status, disability EQUAL CREDIT OPPORTUNITY ACT OF 1974: Age, sex, national origin, material status, public assistance income, color, religion, race
FAIR HOUSING ACT OF 1968
The Civil Rights Act of 1968, the Housing and Community Development Act of 1974, and the Fair Housing Amendments Act of 1968, collectively Protected classes: National origin, color, religion, race
Are lenders required by law to attempt to identify borrowers by race, national origin, gender, and ethnicity, and are borrowers required to provide the data?
The answer is lenders are required to ask, but borrowers need not offer the information. The data is maintained to satisfy federal and state government auditors that the lender is complying with fair lending law.
Olga is allowed to do which of the following under federal law?
The answer is she may choose to rent to a single woman over a single man. The owner-occupied dwelling exemption permits the owner to make decisions based on sex or familial status, but not on the basis of race. A person subject to the exemption, however, may not advertise for tenants based on discriminatory preferences.
What is the reasoning MOST lenders gave for "redlining" neighborhoods?
- Banks were fearful of too many payment defaults from geographic areas. - The redlined communities were heavily populated by blacks and Hispanics. - The redlined communities were heavily populated by low-income people. The answer is all of these. Historically, banks did not want to make loans because they believed people of some races were unreliable borrowers—often making that decision on scant evidence. The Home Mortgage Disclosure Act attempts to overcome that prejudice.
EQUAL CREDIT OPPORTUNITY ACT (ECOA)
-Prohibits discrimination against protected classes (age, sex, national origin, material status, public assistance income, color, race, religion) in evaluating loan applicants -Designed to make credit available to every financially qualified applicant
AMERICANS WITH DISABILITIES ACT (ADA)
A law that requires accessibility to employment, goods, and services for individuals with disabilities
BLOCKBUSTING
Encouraging the sale or rental of property by claiming a protected class of people are moving into the area
CASE STUDY
For the next three questions, assume that Olga has been unsuccessful in renting out the units on her own. Because the agent is managing the property for her, Olga asks him to take on the job of leasing the units as well. The agent is cognizant of Olga's preferences and safety concerns, but he has recently obtained his real estate sales agent license and is also somewhat familiar with federal and state fair housing laws.
CASE STUDY
Olga has inherited a large Victorian home in the Tarrytown district of Austin. The home is three stories and on the National Historic Register; it is in the process of being converted into four apartments. Olga is single and will live in one of the apartments and intends to rent out the other units to tenants. Olga's ideal tenants would be single women in their 30s, much like her. She does not want students living in the apartments or families with small children, because she wants to preserve the historic nature of the property. She is also concerned about her safety and therefore does not wish to lease any units to men. While Olga has a full-time job, she wants to try to rent the apartments on her own without using a real estate agent. She has contacted an agent to discuss managing the property on her behalf. Initially, Olga wants to try to lease the units on her own, so the agent would not be finding tenants for her. The agent's obligations would change if he began leasing apartments.
For each phrase, identify whether it would be permitted under HUD's advertising guidelines. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT (HUD)
PERMITTED: 1) Mother-in-law suite 2) Family Room 3) Master Bedroom 4) Quiet Neighborhood NOT PERMITTED: 1) Near great catholic school 2) Retiree's dream house
CIVIL RIGHTS ACT OF 1968
Prohibits discrimination in housing based on race, color, religion, and national origin
COMMUNITY REINVESTMENT ACT
Requires lenders to meet the deposit and credit needs of their low and moderate income housing communities
HOME MORTGAGE DISCLOSURE ACT
Requires lenders to report the number of loans applied for and loans made in different parts of their service areas
Why is the 1954 court decision Brown v. Topeka Board of Education consider a benchmark ruling in fair housing?
The answer is Brown v. Topeka Board of Education was the first decision that overturned the "separate but equal" doctrine. Until the Brown ruling, segregation was considered acceptable.
Which court decision essentially undermined the Civil Rights Act of 1866?
The answer is Plessy v. Ferguson. The court decision created the doctrine of "separate but equal," essentially legalizing segregation in everything from schools to housing.
A complaint of discrimination brought under the Texas Fair Housing Act can be filed with the U.S. Department of Housing and Urban Development or with the
The answer is Texas Workforce Commission Civil Rights Division (TWCCRD). Complaints of discrimination brought under the Civil Rights Act of 1866 must be taken directly to a federal court. All other complaints are filed with the (TWCCRD) within one year of the alleged discriminatory act.
Fair-housing-protected classes are established by
The answer is federal, state, and local laws. The federal Fair Housing Act as amended has seven protected classes: race, color, religion, national origin, sex, handicap (disability), and familial status. State and/or local laws may contain additional protected classes.
The agent is unsure about what he needs to do to comply with fair housing laws regarding advertising Olga's property. Which of the following is the BEST practice?
The answer is he may use words like "desirable neighborhood" or "rare find." These are racially neutral descriptive words that have been determined by HUD to not create liability under fair housing law. The remaining answers all use words or the selective use of human models that could be considered discriminatory under the law.
If buyers ask their sales associate to only show them homes within walking distance of a synagogue, is that discrimination?
The answer is no, the buyer is stating a legal preference for a living accommodation. Homebuyers are entitled to provide instructions to their agents. Agents may comply with this request.
Which of the following statements regarding fair housing laws best applies now that the agent will be leasing the units for Olga?
The answer is none of the exemptions to the Fair Housing Act apply once the agent takes on the job of leasing the units for Olga. While the "Mrs. Murphy" exemption may apply to Olga making decisions to lease to certain individuals based on her preferences, it does not apply once she hires a real estate agent to lease the units. Thus, she cannot discriminate on any of the federal bases (race, color, religion, sex, handicap, familial status, or national origin). There is no "rational basis" test for discrimination. There is no National Historic Register exemption to fair housing laws.
An aggrieved person who believes illegal discrimination has occurred may file a complaint within _________________ of the alleged discriminatory act?
The answer is one year. If the complaint is filed with HUD, the complaint will be referred to the Texas Workforce Commission Civil Rights Division (TWCCRD) because Texas has a HUD-approved "substantially equivalent" fair housing program that allows complaints to be heard at the state level rather than at the federal level.
Under the federal Fair Housing Act, a landlord may do which of the following if a real estate agent is NOT involved in the transaction?
The answer is refuse, based on sex, to rent a room in an owner-occupied dwelling. The Fair Housing Act of 1968, as amended, makes it unlawful to discriminate against protected classes on the basis of race, color, religion, national origin, sex, handicap (disability), and familial status when selling or leasing residential property. A few exemptions are provided for special circumstances. However, no exemptions are permitted for racial discrimination and no exemptions apply when a real estate license holder is involved in a transaction. Two of the exemptions are as follows: (1) the rental of rooms or units is exempted in an owner-occupied, one-family to four-family dwelling, and (2) dwelling units owned by religious organizations may be restricted to people of the same religion if membership in the organization is not restricted on the basis of race, color, or national origin.
Which of the following statements is TRUE regarding the applicability of Federal Fair Housing Act (the Act)?
The answer is the Act does not apply to Olga because she lives there and it has only four units. There is an exemption in federal fair housing laws for an owner-occupied dwelling designed for occupancy by no more than four families living independently of each other, also known as the Mrs. Murphy exemption. There is no exemption for homes on the National Historic Register. Similarly, there are no exemptions based on the sex or marital status of the owner.
Which of the following statements BEST applies concerning Adam's duties as Olga's agent under the facts described above?
The answer is the agent will be acting as a special agent for Olga in leasing the units in the house. A real estate agent generally acts as a special agent for a landlord or tenant. A special agent is authorized to represent the principal in one specific act or business transaction, under detailed instructions. The agent must provide the Information About Brokerage Services form to landlords and tenants as well as buyers and sellers unless a specific exception applies, which are not present under these circumstances. The real estate sales agent is not the intermediary. He may be appointed to represent a landlord or tenant, but his sponsoring broker is the intermediary. The agent must disclose to potential tenants that he represents Olga, but the disclosure may be orally or in writing.
The seller of one single-family home would NOT be in violation of the Fair Housing Act even if
The answer is the owner discriminated on the basis of religion. The Fair Housing Act of 1968, as amended, makes it unlawful to discriminate against protected classes on the basis of race, color, religion, national origin, sex, handicap (disability), and familial status when selling or leasing residential property. A few exemptions are provided for special circumstances. However, no exemptions are permitted for racial discrimination and no exemptions apply when a real estate license holder is involved in a transaction. The sale or rental of a single-family home is exempted when the home is owned by an individual who does not own more than three such homes at one time and when a real estate agent is not used, and discriminatory advertising is not used, the owner was not the most recent occupant, and the owner has not made another such sale within the previous 24 months. The exemption will apply to one sale or rental within a two-year period, unless the owner was the most recent occupant.
What specific issues might women confront when seeking a mortgage?
The answer is widowed or divorced women may have no credit ratings in their own name. If their husbands have always held property, bank accounts, credit cards, et cetera, in their own name, the women may have difficulty documenting a financial history. Women should contact credit bureaus to make sure they have their own financial records.
Are all forms of media - including the internet - obligated to follow fair housing advertising law?
The answer is yes, any media that carries real estate advertising is subject to the requirements of fair housing law. While free speech is generally protected across all media, advertising is not protected and must follow federal guidelines.
If a real estate license holder decides to sell his one personal residence as a FSBO but refuses to show it to a Muslim refugee family, is he in violation of fair housing law?
The answer is yes, even though acting as a FSBO, no real estate license holder is exempt from fair housing law. License holders always must obey all sections of the law or risk losing their license.
It is clearly a violation of the Fair Housing Act to deny an apartment to someone based on their faith, such as being Muslim, but is it illegal to evict them because they have frequent guests who also are Muslim?
The answer is yes, it is illegal to evict someone just because a landlord does not like their guests. Fair housing law protects both tenants and guests on the basis of race, color, and national origin.
