Cara L. Gallagher, weekend contributor
There was a case argued two weeks ago that I’ll admit I paid no attention to when I created my roster of Cases to Watch in the OT14: Texas Department of Housing and Community Affairs v. The Inclusive Communities Project. A woman who teaches a course on social justice in urban areas asked if I knew anything about this case after it popped up on her Twitter feed. Her students were interested in the impact of the case and, as many of them had just taken my law and politics course and knew the ideologies of the Supreme Court bench, wanted to know more about it so they could make predictions about the outcome. As an educator and (self-described) specialist of Supreme Court activities, I did a deep dive into researching it in an effort to help with this teachable moment and immediately moved it into the top five cases to watch this term.
This is a case about a specific part of the Civil Rights Act of 1968, that iconic piece of legislation signed one week after Dr. King was shot, called the Fair Housing Act (FHA).
Lyndon Johnson signed the legislation into effect to make sure King’s dedication to creating equitable access to vote and to end discrimination, common in communities where white flight had produced segregated towns and cities, was not in vain. Title VIII of the FHA prohibits discrimination in the sale, rental, and financing of dwellings based on the race, color, religion, sex, or national origin. Twenty years later, Congress reaffirmed the FHA and added disability and familial status (pregnancy of occupant, number of children under 18) to the list of prohibitions. In addition, the 1988 law gave more powers to the Department of Justice to bring suit on behalf of victims.
This case is similar to Hobby Lobby and Shelby County in that the justices will be evaluating the text of a statute, or law, rather than a constitutional question about searches, seizures, or free speech. In those two cases, the Religious Freedom Restoration Act (RFRA) of 1993 and the Voting Rights Act of 1965 were the two statutes in question. This Texas case serves as an opportunity for the SCOTUS to test the strength of old legislation using a modern challenge. It’s worth noting that more time has elapsed since the FHA was reviewed and augmented than the time between its inception and the 1988 review.
The purpose of the FHA is to protect people from being denied housing because of the discriminatory actions by landlords and homeowners. This weekend I caught up on Slate’s Amicus podcast hosted by Supreme Court reporter and writer Dahlia Lithwick. Lithwick interviewed Sherrilyn Ifill, an attorney with the NAACP, who said proving a landlord has intentionally discriminated against someone is darn near impossible. It sometimes takes a case as extreme as that of former NBA Los Angeles Clippers owner Donald Sterling’s videotaped confession in which he admitted to never renting any of his numerous properties to African-Americans to prove intentional discrimination.
Of course, this kind of evidence of discrimination is very rare and difficult to procure. The more common forms of discrimination are cancelled appointments, no-shows to apartment showings, convoluted application forms, or requirements that applicants have very high credit scores. The aforementioned are common race-neutral practices in which the intentions are not overtly discriminatory but the outcomes consistently result in white tenants. Such practices perpetuate segregation in that they marginalize minority tenants to areas predominantly inhabited by minorities, as is the case in the suburbs of Dallas, where this case derived.
Michael Daniel and U.S. Solicitor General Donald Verrilli argued in support of The Inclusive Communities Project that the Texas Department of Housing’s practice of “distributing federal tax credits for low-income housing in a way that disproportionately affected minorities” is perpetuating racial segregation and though such practices do not rise to the level of intentional discrimination result in racial segregation the FHA was created to challenge in courts. Scott Keller, Texas’ Solicitor General, argued that if Congress intended to allow disparate impact cases they would’ve articulated exactly those words in the 1988 reauthorization of the FHA. To allow such cases would open the floodgates to anyone who wanted to challenge any seemingly insidious discriminatory business practices of landlords and homeowners in courts.
There are some interesting facts associated with this case. First, according to reporters inside the Court during oral arguments, Scalia had arduous and cantankerous questions for both sides. With the four liberal justices challenging Texas and Roberts, Alito, and the always silent Thomas likely siding with the state, this case has a high probability of being one in the small pool of 5-4 decisions this term. [Only ten cases resulted in 5-4 decisions last term.] Finally, and also worth noting, this is the third time the Court has taken a housing case in the last three years, but the first time they actually got to hear it. The previous two cases were both settled before oral arguments.
How does this bode for the petitioners in this case? Well, I’d say. It’s clear at least four of the justices on a bench often revered for its pro-business decisions have something to say about recent interpretations of the Fair Housing Acts.
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I think it’s sad that our society punishes the most because of the few that don’t do what’s right. People do change and everyone with a criminal background is not guilty. If someone has gone to jail, they probably won’t have good credit because they haven’t been working, but they have to live and work somewhere. I think they should be given another chance, and if they’re wrong, they will fail anyway!
Happy,
You said, “It is totally illegal to give more tax credits to a minority and it will group them together.” But aren’t tax credits based on income? Don’t minorities have lower income?
Unless we lived in one big homogeneous soup of a society, the will always be disparity. And if we did live in that world, we would not need these laws.
I don’t think anyone is denying that there is racism in this country. And if there was a law that eliminated racism, I would vote for it. I agree that is should be illegal to discriminate based on race. I don’t agree that it should be illegal to discriminate based on criminal history, which is one of the effects that the “disparate impact” theory claims.
Karen –
I have not read all your comments, but from what I read I think you are correct. Landlords and banks have to make a decision somehow. The original law said that it was legal to discriminate for “substantial and legal” business purposes. I’m a landlord and I don’t want to rent to felons. Not because I am trying to discriminate, but because felons historically make bad tenants. Should I be force to rent to Charles Manson or Jeffery Dommer if they apply to rent from me, because a disproportionate amount of one ethnicity has felons? Isn’t the fact that they have a history of killing people a “substantial” reason to deny someone? It won’t be if the “desperate impact” is upheld!
As a landlord, I just want tenants who are respectful of other people in the building, take good care of their rental and pay their rent on time. As long as they do those thing, the color of the skin, their sexual orientation and what god(s) the do or don’t worship really does not matter. Being a landlord is like any other business. The ones that make good financial decisions stay in business. The ones that make bad financial decision, like turning down good potential tenants because you don’t like the color of their, renting to a bad tenants because she goes the same church as you, etc., will quickly go out of business.
People don’t think of landlords as “going out of business,” but if you knew the real estate market, you would know just how many apartment buildings and rentals go into foreclosure every year. We landlords must be able to make good business decisions to survive.
As one of the attorneys in this case pointed out, why isn’t anyone suing the NFL for not insuring that there are more White and Asian football players? Isn’t that discriminatory employment practices?
Happy – you are completely right. The mortgage industry did red line neighborhoods, refused to lend to minorities, and real estate agents did use those same tactics.
That is one reason behind white flight.
The other is socioeconomics. As a neighborhood ages, some tend to get higher crime, more run down, and become more unsafe. They don’t all age gracefully like Knob Hill. Those who can afford to move, do, and those who cannot afford to move, stay. Since more minorities suffer from poverty, that means more minorities stay and more whites leave.
Since the FHA, and other federal regulations barring this behavior, it’s rare to read about anyone being prosecuted for discrimination in real estate. It still happens, but I haven’t heard of many cases. What is more likely nowadays is that people look out their windows, start to see more police cars, and get out of Dodge. And offering a safer neighborhood would absolutely be a selling point for an agent. Selling homes in an unsafe neighborhood would be challenging, by the same token. Many neighborhoods become converted to rentals for that very reason.
When I see people of any color struggling, I think, how can we help them improve their situation and get stability, not how can I hand them more debt in their current unstable situation. And that’s what ACORN, et al did in the subprime bubble.
Karen S.
We all know about Community Organizers and ACORN. And they still make excuses for Obama’s involvement on that and he is now screaming and doing stampy feet to make an amendment to get rid of Citizens United. The man is a menace
Darn auto-correct, that was supposed to be “creates” not “creases.”
Happy:
It wasn’t apartments my grandparents rented out, but their houses. As they grew older, they moved closer to my parents, who helped take care of them. They rented out the house that my Grandpa had built, as well as the two little houses next door that had belonged to my Great Grandmother. We had a lot of memories from those little houses. They really needed that rent money to afford their new house, as they had trouble selling those houses to buy the new one. So the rent was vital.
The renters took hideous advantage of them. All 3 of them completely trashed the houses, put cigarettes out in the carpets, parked cars on the lawn, at least one had 25 people living in it, ripped out the screens, broke windows, and they all stopped paying rent. It took months and months to wind through the eviction process in court. Luckily, my parents were able to help them. My grandparents were in their eighties. By the time the eviction was done, the bank foreclosed on at least one of the properties. After a series of events, they ended up moving in with my parents anyway. It was a travesty, to burn the elderly like that.
That class on credit management sounds like a good idea. It’s my understanding that there are free programs for the indigent, but there need to be more. I like Dave Ramsey’s approach.
And I absolutely agree that people meant well with trying to help the poor get homeownership. Heck, I meant well with some of my votes that I later regretted. Where I have a problem is the end result hurt that group, but we seem to be trying to repeat history. They’re not doing anyone a favor giving them a mortgage they are ill equipped to handle.
It’s fair to require the same criteria for everyone, and provide programs to help the poor improve their circumstances. If anyone applies a higher credit standard only to minorities, that is absolutely wrong. I recall one group hired minority and Caucasian actors, and went undercover apartment hunting. They did uncover some landlords who discriminated against minorities.
Any push to make landlords lower credit requirements may force more people to suffer what my grandparents did.
I have a question on this section of the article:
“Michael Daniel and U.S. Solicitor General Donald Verrilli argued in support of The Inclusive Communities Project that the Texas Department of Housing’s practice of “distributing federal tax credits for low-income housing in a way that disproportionately affected minorities” is perpetuating racial segregation and though such practices do not rise to the level of intentional discrimination result in racial segregation the FHA was created to challenge in courts.”
The goal of the ICP is to promote racially inclusive neighborhoods. But is the problem that since more minorities are poor, more minorities get federal low-income housing credits, which creases minority-dense neighborhoods, giving the appearance of segregation?
Karen –
That was what I was jumping on. They are NOT supposed to do that and they do it anyway. When I took my real estate classes the one thing we spent a lot of time on was the Civil Rights acts as they were very important to real estate but you could never recite them to a client as you were not a lawyer.
It is totally illegal to give more tax credits to a minority and it will group them together. Think of the computer hacking that goes on in order to pull something like that. Just total bs. I am sure they actually have a little software program just for that so there is only one initial hack. Such slime.
Don’t get me started. lol
This is what Cara meant when she wrote this article. She is sharp!
Justagurl – you are correct. The FHA did not require accepting bad credit. It is rather indications that the moorage industry is racist in fact, if not in intent, that we were discussing. And requiring good credit will mean fewer minority homeowners, because minorities suffer more poverty.
What DID force accepting lower credit scores was writing in Affordable Housing requirements to Fannie and Freddie which enforced government quotas.
http://www.theatlantic.com/business/archive/2011/12/hey-barney-frank-the-government-did-cause-the-housing-crisis/249903/
Quote from Barney Frank himself: “I hope by next year we’ll have abolished Fannie and Freddie … it was a great mistake to push lower-income people into housing they couldn’t afford and couldn’t really handle once they had it.”
Happy:
I read the Bloomberg article. It states along the lines of the housing market cannot be vibrant if so many minorities are excluded from it.
That kind of thinking did great harm to minority families in recent times, albeit with the best of intentions.
Historically, banks required exemplary credit and 20% down to buy a home. That is because people would fight tooth and nail to keep an asset in which they had invested a significant amount of their own money. And since past predicts future, good credit predicts paying a mortgage on time. The banks don’t just give away hundreds of thousands of dollars.
It was noted that minorities suffer more poverty than any other ethnic group, and that less were homeowners. That started the whole “homeownership is a right” mantra. And that spawned a Democratic Congress passing laws that required banks to give sub prime loans “to be fair”. The banks bundled those loans in with low risk loans, and sold them on the mortgage instruments market. And they went hog wild.
But past does predict future. Those with no savings, bad credit, and no or little money down did in fact walk away from the houses that they obviously couldn’t afford. And that led to those mortgage securities having poison pills for the investors, such as retirement fund managers. And that popped the subprime housing market.
Poor families saw their dream of homeownership turn into a nightmare of foreclosures, which made their credit even worse.
People have a right to food and shelter. They do not have the right to own that shelter.
But instead of learning from harming these families, Democrats are, once again, ruminating along the lines of it’s racist not to lend to poor credit.
My question for those is, if you had a cousin who never paid anyone back, ever, and he came to you asking you to lend him $15,000, would you do it? Or would you wisely determine that you would lose the money?
It is not racist to require good credit for a loan. It is true that minorities are hardest hit with poverty and bad credit, for a vast number of reasons. One of the primary indicators for poverty is single motherhood, with no support from the children’s fathers. And yet, minorities have a 75% rate of single motherhood, with no support from the fathers. It’s a statistical fact, and the corollaries with poverty, etc have been strongly proven. So there are many things that can be done to shore up these communities and give them their best chance.
To address the disparity in homeownership, I would absolutely support programs that teach how to improve credit scores, save, create a family budget, improve job skills, and lower the incidence of unwed mothers.
As I stated before, after seeing the trauma my grandparents went through as landlords, I would require good credit and a background check. Those risk predictors are indeed accurate. And it is shocking how awful a bad renter can be, especially if you depend on that rent money.
Karen S,
How else am I supposed to draw you out? lol I did not know that your Grandparents leased apartments.
You are absolutely correct in pointing out to justagul that the—————
“The FHA did not require accepting bad credit. It is rather indications that the moorage industry is racist in fact, if not in intent, that we were discussing. And requiring good credit will mean fewer minority homeowners, because minorities suffer more poverty.”
Which is why I quit the real estate market.
“To address the disparity in homeownership, I would absolutely support programs that teach how to improve credit scores, save, create a family budget, improve job skills, and lower the incidence of unwed mothers.”
After bankruptcy I have a friends who have gone through the process recently and they had to take a class on credit management and pay for it.
“Quote from Barney Frank himself: “I hope by next year we’ll have abolished Fannie and Freddie … it was a great mistake to push lower-income people into housing they couldn’t afford and couldn’t really handle once they had it.”
I still think Barney Frank meant well.
As far as the “vibrancy” of the Bloomberg article, I would have explained it in another way, I have very conflicting opinions about this simply because I watch the highest offices of the government, and I do not mean Obama because that has not come to light yet from open books of the CIA like the Iran Contra has with the CIA dealings of Cocaine in Nicaragua which came all the way up here to LA and New York and caused a crack epidemic that destroyed millions of lives, families and credit references.
But when I start thinking about that, I can’t even go out the door…… so lets not go there.
😉
All in all a great discussion and great points you made!!
If I read this correctly; whitey is a racist if he leaves town and a discriminating racist if he stays and doesn’t run a business for social justice. Got it.
There is NOTHING in the FHA that requires Landlords to accept people
with Bad credit, or even LOW Credit Scores…
NOR does this article even mention that they are compelled
to accept LOW CREDIT Scores….
in the posting it says…
“The more common forms of discrimination are cancelled appointments, no-shows to apartment showings, convoluted application forms, or requirements that applicants have very high credit scores.”
———-
and below…. which again does NOT mention anything regarding the Landlord having to accept somebody with Bad Credit or Risky Credit……
“Title VIII of the FHA prohibits discrimination in the sale, rental, and financing of dwellings based on the race, color, religion, sex, or national origin. Twenty years later, Congress reaffirmed the FHA and added disability and familial status (pregnancy of occupant, number of children under 18) to the list of prohibitions.”
I love when sanctimonious liberals go on about white flight. People engage in white flight in order to live in a safe neighborhood and avoid violent behavior. I wonder what kind of neighborhood the writer lives? A gated community perhaps or building with 24 hour security? All while looking down at working class people.
Tony
People leave in white flight in the early 1970s because they are told by unscrupulous mortgage brokers that their house values will go down if they stay because an unsavory element is going to move in because they are going to be subsidized by the government. That way the door is open to make more money.
But, if they are discriminating tax credits by race, what difference does it make Karen. This isn’t the same thing as allowing a low credit score like before.
http://www.bloomberg.com/news/articles/2014-09-24/lending-to-minorities-declines-to-a-14-year-low-in-u-s-
This is a great article Cara and I have been wondering when you would write again and I actually was having an argument about this subject with my Husband today as I was in Real Estate for a short time and I never did the white flight thing in St.Louis which was my home town. I live in Cape Girardeau now because that is where the Veterans Home is for my Husband.
This entire issue has always made me soooo mad at the Financial institutions and the montage companies and their little game. The thing is they not only screwed us but themselves. So dumb.
I can see these conservative Justices eroding every last one of the protections against discrimination of minorities. Sad because minorities fought so hard for them.
Ted – if Legal Aid won’t get involved, doesn’t the DOJ handle violations of FHA? Are you referring to a 3 day to pay or quit? Under some circumstances that is allowed here in CA Not sure about Montana. The actual time it takes to evict someone can drag on to many months in court. Why do the Property Mgmt companies serve that 3 day notice? If the tenants are UTD on their rent, they may have a case.
http://www.courts.ca.gov/1288.htm
I support the FHA. However, I question regarding a high FICO requirements as discriminatory in effect, if not intent.
By allowing a low credit score, isn’t a landlord agreeing to risk having a tenant who fails to pay rent on time, and as a worse case scenario, will require a lengthy and expensive eviction? My grandparents rented property out for a while, and one time it was awful. They trashed the house, parked a car on the lawn, brought in many times the number of residents agreed, and if I remember correctly, had to be evicted after months and months of non-payment. If I ever take on the role of landlord, I would require good credit and a background check to minimize such a disaster. Unless you rent out Section 8, why shouldn’t landlords be allowed to minimize their financial risk?
This also seems to be the case with Native Americans and those who have any type of felony in ones past. Here in Montana this goes on very much. Even to the point that one of the local Property management companies even go to length of giving their clients a 3 day notice not an 30 day notice as the law states. Yet, no one does anything for those being discriminated against. Local attorney’s do not want to get involved.