The Leadership Conference on Civil and Human Rights

The Future of Fair Housing

• Table of Contents
• About the Commission
• Acknowledgements
• Executive Summary
  • Recommendations
• Introduction
• I. Housing Discrimination and Segregation Continue
• II. Fair Housing Enforcement at HUD is Failing
• III. Fair Housing Enforcement at the Justice Department is Weak
• IV. The Need for Strong Fair Housing Programs
• V. Fair Housing and the Foreclosure Crisis
• VI. Federal Housing Programs
• VII. Fair Housing Obligations of Federal Grantees
• VIII. Regionalism and Fair Housing Enforcement
• IX. The President's Fair Housing Council
• X. Fair Housing Education: A Missing Piece
• XI. The Necessity of Fair Housing Research
• XII. Conclusion

Appendices

• Appendix A: Emerging Fair Housing Issues
• Appendix B: International Disapproval of U.S. Fair Housing Policy
• Appendix C:
  • Letter to Congressional Leaders
  • Letter to U.S. Treasury Secretary Henry Paulson
• Appendix D: Commission Witnesses and Staff

Incorporate Fair Housing Principles into Foreclosure Relief Implementation

In recent months, the federal government has taken unprecedented steps to address the current economic crisis. Much of the focus of this work has been directed at rescuing the financial markets by assistance to financial institutions. At the same time, there has been little relief provided to homeowners facing foreclosure.

The Commission has followed these activities closely. We are concerned with the lack of progress in adopting systematic programs to assist homeowners faced with foreclosure, which hurts minorities disproportionately because of the discriminatory causes just discussed. We are also alarmed by the lack of any attention to addressing the underlying fair housing and lending issues and the need to promote fair housing goals as part of the response to the crisis. On two occasions the Commission has written letters raising these concerns (see Appendix B).

First, on September 24, 2008, the Commission wrote to the Congressional committee chairs and ranking minority members responsible for drafting emergency legislation to address the financial market meltdown. In that letter, we listed discriminatory practices in the lending market that were a central cause of the current crisis and set forth several fair housing and fair lending principles that we requested be included in the emergency legislation. Second, on October 24, 2008, after emergency legislation had been passed, the Commission wrote to the Secretary of Treasury to urge that his Department not waive or overlook the civil rights requirements applicable to it and to the lenders who would be receiving assistance. We urged that the rescue activities under his jurisdiction be carried out in a non-discriminatory manner and in a manner that met the responsibility to affirmatively further fair housing.

Specifically, the October 24 letter recommended that: the review of loans acquired by any federal agency be given expedited review for potential civil rights violations and unfair and deceptive practices; the Treasury Department promote home preservation measures and protection of the rights of tenants in its loan modification activities; and management of REO properties (i.e. foreclosed properties owned by the mortgagee) obtained through loans acquired pursuant to the rescue bills (such as the Neighborhood Stabilization Program) be handled in a non-discriminatory manner that affirmatively furthers fair housing.

The principles articulated in the September 24 letter and the specific steps recommended in the October 24 letter with respect to any loan obtained by the federal government are still important as the process of determining appropriate financial rescue steps goes forward. However, these principles still do not appear explicitly in any of the discussion or guidance concerning the rescue packages. ^[205] Therefore, we reiterate the recommendations in our October 24^th letter and further recommend:

• Any federal, state, or local government with responsibility for foreclosure rescue plans, such as loan modification or relief for neighborhoods damaged by foreclosure, must adopt and announce publicly the specific steps it will take, and requirements it will impose, to affirmatively further fair housing and avoid segregation.
• The President’s Fair Housing Council should coordinate federal fair lending enforcement by fostering better coordination between HUD, the Department of Justice, the bank regulatory agencies, and private fair housing groups. This should include prioritizing fair housing and fair lending litigation, including cases challenging the disparate impact of practices and policies, such as discretionary pricing policies that have had a discriminatory impact on minority borrowers.
• The President’s Fair Housing Council should review the implementation of homeownership preservation, foreclosure prevention, and loss mitigation efforts to ensure that these programs are being implemented in a manner that affirmatively furthers fair housing.
• HUD and the Department of Treasury should develop and apply appropriate sanctions, with due process protections,^[206] for any entity seeking foreclosure relief funds that is found to have engaged in violations of the Fair Housing Act.
• HUD should implement a special fair lending initiative in cooperation with private fair housing groups to fund the investigation and redress of discriminatory practices in the lending sector. This initiative must include an evaluation of programs designed to return foreclosed properties to active use so they do not destabilize the surrounding neighborhoods.

Next Section: Federal Housing Programs: The Mandate to "Affirmatively Further Fair Housing"

Footnotes

[205] For example, in press releases and guidance memorandum from HUD on September 26, 2008 and October 23, 2008 concerning the Neighborhood Stabilization Program, there is no mention of the duty to affirmatively further fair housing in use of these funds. Given that close to $4 billion will be used to assist neighborhoods devastated by foreclosures, which are disproportionately minority neighborhoods, this is a significant opportunity to further fair housing and implementation of the program should explicitly recognize this.

[206] 24 CFR Part 180, Consolidated HUD Hearing Procedures for Civil Rights Matters.