Dec 17, 2010

Treasure Island Plundered With 3.725 Million Dollar Settlement

In a rare, multi-million dollar settlement, the Code Enforcement Board (CEB) of The City of Treasure Island, agreed to pay the sum of 3.7 million dollars to Gulf Coast Recovery, and its proprietor, Matthew Schwarz in a settlement agreement after several unsuccessful attempts at litigation.

A small city on Florida’s gulf coast, Treasure Island’s population of 7,500 doubles during the winter months; the warm climate and attractive coastal location a favorite of vacationers and “snowbirds” (a Floridian term for retirees from northern states). As a result, the City of Treasure Island’s zoning scheme has come up with unique ordinances to deal with the ebb and flow of its population throughout the year.

The City created a limit on the number of times a “single family or two family dwelling” can change occupancy during a twelve month period in certain areas zoned for single-family dwellings, in order to keep vacationers and snowbirds from disrupting “the sense of community of its permanent residents.”

Gulf Coast Recovery (“GCR”) is a company licensed by the Florida Department of Children and Families to provide outpatient rehabilitation services to recovering drug and alcohol abusers at its treatment facility located In the City of Treasure Island. However, the company’s license does not allow it to provide in-patient or residential treatment. In order to circumvent this limitation, GCR rents or owns property in which its clients stay during the rehabilitation process.

Conflict between GCR and Treasure Island arose when neighbors to one of these properties in which GCR patients stayed, complained about excessive noise and disturbances from GCR patients. In response, Treasure Island sent Schwarz a “Code Enforcement Detail”, observing that Schwarz had “opened up two rehab houses on the island.” Schwarz was then ordered to provide information such as the number of tenants living in the properties Schwarz and GCR owned, the amount of turnover, and the length of the leases.

After some heated disputes with the CEB, Schwarz was determined to have breached the city’s zoning ordinances. Schwarz, GCR, and several of GCR’s patients then sued Treasure Island in the US District Court for the Middle District of Florida, alleging that the city’s zoning code enforcement actions unlawfully discriminated against the residents of the halfway houses.

The case ultimately went to trial. The District Court found in favor of Treasure Island after a motion for summary judgment, stating that the apartments were not “dwellings” and that even if they were assumed to be dwellings, Schwarz and GCR failed to establish intentional discrimination.

On appeal, the 11th Circuit concluded that all the apartments were “dwellings” pursuant to the Fair Housing Act, and remanded the case back to district court to determine whether a fact issue existed as to whether living in the halfway houses was “necessary” to afford recovering substance abusers an “equal opportunity to use and enjoy them.” Schwarz v. City of Treasure Island, 544 F.3d 1201 (11th Cir. 2008).

On remand, Schwarz was successful. A jury verdict passed down in February 2010 held that Treasure Island’s attempt to close the halfway houses violated the fair housing act. After an unsuccessful motion for summary judgment (see Schwarz v. City of Treasure Island, 2010 WL 3747787 (M.D. Fla. Sept. 22, 2010)), Treasure Island decided to settle the case with Schwarz and GCR for more than $3 million dollars. Though Schwarz claimed losses in excess of $7 million dollars, Schwarz found the settlement to be a fair agreement. As part of the settlement, the city also agreed to allow GCR to occupant turnover rates of up to six times per year in a total of four buildings that were zoned for residential, single family dwellings.

The City commission reportedly found the settlement to be “in the best interests of the city”, with the mayor concluding that “everyone is glad [the case] is done with.” One of GCR’s clients was also slated to receive $36,000 as a result of the case as well, for “emotional turmoil” caused by Treasure Island’s code enforcement efforts.

Oct 28, 2010

Traffic on The Road Home: Delayed Due to Construction

Some five years after Hurricane Katrina dissipated, its after effects continue to ring out in Louisiana. But the bell tolls louder for some, than others.

The Road Home (TRH) program was designed by former Louisiana Governor Kathleen Blanco, whose mission is “to provide compensation to Louisiana homeowners affected by Hurricanes Katrina or Rita for the damage to their homes.” Claiming themselves to be “the largest single housing recovery program in U.S. history”, The program’s objective is “to provide compensation to Louisiana homeowners affected by Hurricanes Katrina or Rita for the damage to their homes.”

TRH came about as a block grant program to assist in the recovery of the region ravaged by hurricane Katrina. These grants were placed in the State of Louisiana for designation. Approximately $11 billion was allocated for TRH, which was developed by the Louisiana Recovery Authority (LRA). The Department of Housing and Urban Development, or, HUD, also helped develop TRH. HUD is also the governmental entity that disburses funds to the LRA for use in The Road Home program.

Each beneficiary under TRH has a number of options to ease their transition back into New Orleans, one of which is the “Option 1” program, in which each beneficiary receives an award in the amount of either the value of their home before Katrina hit, or the cost of repairing their home, whichever is less. The amount granted would not total more than $150,000. Additional Compensation Grants (ACGs) were made available as supplemental awards for families whose incomes are at or below 80% of the median in their areas, but are still subject to the $150,000 cap.

Despite the laudable goals of the program, however, its administration, allegations of fraud, and race discrimination have left serious doubts about its effectiveness and impartiality.

Of particular concern is the way homes are valued. Families who had homes in economically depressed areas would receive significantly less money from TRH program compared to other families who had homes in more economically prosperous locales.

David Hammer of The Times-Picayune has been following the development of the TRH program. Read the stories here.

In the original case filed in the US District Court of Columbia, Greater New Orleans Fair Housing Action Center v. United States Department of Housing and Urban Development, 2010 U.S. Dist. Lexis 66583 (D.D.C. July 6, 2010), the plaintiffs, individual homeowners and the Greater New Orleans Fair Housing Action Center, alleged that the LRA’s use of pre-storm home values “has a discriminatory disparate impact on African Americans living in historically segregated communities.”

Specifically, the plaintiffs argued that African American homeowners were more likely than white homeowners to own homes with lower values. This makes them more likely to receive less than white homeowners under TRH, between the amount of the grant, and the cost of rebuilding.

As such, the plaintiffs sought an injunction requiring recalculation of TRH awards to homeowners in New Orleans using an alternate formula that does not have a disparate impact on African Americans.

Although the District Judge agreed that the calculation of awards under TRH did have a disparate impact, the court denied the injunction, holding that the court would be unable to “provide the ultimate relief plaintiffs seek”, citing the Eleventh Amendment’s prohibition on lawsuits against state governments without consent from the state, among other reasons.

However, the US Court of Appeals in D.C. reversed the decision, granting the plaintiffs the injunction they sought. The state of Louisiana has been barred from redistributing unused TRH funds for other purposes.

In an interview with David Hammer and The Times-Picayune, James Perry, president of the Greater New Orleans Fair Housing Action Center, said “The appellate court ruling means there is a strong possibility that Judge Kennedy will be able to direct the state to award additional money to people who have already received Road Home grants based on pre-storm value … We’re hopeful it will make clear that additional compensation should be based on cost of repairs, rather than on pre-storm value.”

The LRA, of course, denies any intention of discrimination.

Argument is set over the next few months, before the appellate court, per the State of Louisiana’s appeal over the initial decision.

The injunction has been loosened somewhat to allow for operation of the TRH program, due to a clarification from Judge Kennedy. “The state said 382 buyout grants -- so-called Option 2 and Option 3 grants, like Bailey's -- can move forward. So too can 784 supplemental payments for homeowners who have already received initial grants under Option 1”, according to Hammer.

However, there are still 85 initial Option 1 grants based on pre-storm value that must remain frozen while appeals of Kennedy's official ruling are pending.

Much like the FEMA debacle, it seems that the road to recovery for New Orleans is fraught with obstacles and potholes to overcome. While the courts have been relegated to repair the damaged process of home valuation, it seems that some on The Road Home, have to deal with more delays.

Oct 15, 2010

Can Landlords Discriminate Based on Arrest Records?

Marie Claire Tran-Leung disagrees. According to Tran-Leung, “Landlords and local housing authorities should stop using arrest records to screen tenants.” She states that doing so does “more harm than good.”

Although it is illegal for landlords to discriminate based on race, color, religion, sex, national origin, disabilities, and other protected classes under the Federal Fair Housing Act, most states have also applied protection to other classes. For example, the State of Illinois prohibits discrimination based on ancestry, age, marital status, and sexual orientation. Discrimination against people with arrest records, however, is legal.

But should it be? Tran-Leung claims that discrimination based on arrest records “give[s] people a false sense of security against crime, and they deprive disproportionately more racial minorities of needed rental housing for nothing more than an unproven accusation.” Read the full story here.

Tran-Leung cites a recent decision by the Illinois Appellate Court, Landers v. Chi. Hous. Auth., 2010 Ill. App. LEXIS 1010 (Ill. App. Ct. 1st Dist. Sept. 20, 2010), supports for advocating a ban on discrimination based on arrest records.

Landers was a case about a man who had been arrested no more than 34 times while he was homeless. Placed on the Chicago Housing Authority’s (CHA) wait list for public housing in 1995, he finally got his turn in 2008. However, after thirteen years of waiting for a chance to live in public housing, he was turned down by the CHA because of his arrest record.

After undergoing an informal review (per CHA regulations), to dispute his arrest record, the CHA still denied him housing. The Illinois Appellate Court for the First District held that because his arrest record did not contain any convictions, or circumstances outlining his arrests, they did not meet the definition of “the requisite violent crimes or drug-related criminal activity necessary to constitute a criminal activity.”

The case itself doesn’t stand for the proposition that the CHA may not discriminate based on arrest records, rather, the 1st District Appellate Court held that arrest records which do not contain convictions or have any background information as to why the person was arrested, does not constitute “criminal activity.”

Examples of what constitutes “violent criminal activity” that can be the basis of turning someone down for housing are including, but not limited to, “homicide, murder, vandalism, burglary, armed robbery, theft, trafficking, manufacture, or use of illegal drugs …”

In this case, Landers was charged and arrested for numerous crimes related to being homeless. He also denied that he committed those offenses (instead, he attributed them to a twin brother). All but one charge for drinking in public resulted in conviction.

The court explicitly stated that they did not dispute the CHA’s ability to deny housing to an individual based on their convictions and substantiated arrests. However, in this case, the court held there was no evidence that Landers was a potential threat to the “health, safety, and welfare of the public housing community,” concluding that “the sheer number of petitioner’s arrests does not establish a history of criminal activity.”

While this case opens up some avenues of justice for those who have been arrested, but not convicted of certain crimes, the CHA is still able to discriminate based on past, substantiated convictions. This still leaves out a large number of people who have served time in correctional facilities.

Tran-Leung argues that rejection of housing to individuals with spotty arrest records unfairly denies people housing, and that “to prevent this outcome, HUD should bar housing authorities and private owners participating in HUD programs from using arrests to screen applicants.”

This, however, leaves some concerns about possible public safety concerns. So is there a better way? Perhaps, but for many with arrest records, this case leaves them out in the cold.

Aug 23, 2010

Race discrimination suspected in couple's delay to sell home

George Willborn, popular comedian and radio personality, claims he was denied the purchase of a ahouse by a white couple, Daniel and Adrienne Sabbia, selling their chicago home because of his race.
On August 10, 2010, the U.S. Department of Housing and Urban Development announced that the couple along with their real estate agent Jeffrey Lowe will be charged with violating fair housing law. The the Willborns state the couple demonstrated "strange behaviour" during the house tour, and are accused of postponing negotiations although the Wilborns made a $1.7 million offer, the highest the sellers had received during the two years the home was on the market. Further, the Sabbias allegedly took the property off the market to avoid selling to the Wilborns. The real estate agent Jeffrey Lowe told government officials that the Sabbias did not want to sell to African Americans.
Wilborn filed the complaint in January, it was amended in March and July. The cases will be heard before an administrative judge unless the parties decided otherwise. Once learning of the complaint, the Sabbias offred to sell the property and all of its furnishings for $1.8 million. Punitive damages or equitable relief can be awarded if the judge finds the Wilborns were discriminated against.

Aug 10, 2010

July 19-25 News Round-Up

Kagan’s questionable history protecting tenant’s rights:
Supreme Court candidate Elena Kagan’s position on housing discrimination is unclear to some; however, a closer look into her past opinions may provide some insight. In a case brought by tenants in Chico, California, Kagan stood in clear support of the landlord who refused to rent to a couple because they were unmarried and because it went against the landlord’s beliefs. The Supreme Court decided in favor of the tenants, but Kagan recommended that the Clinton Administration urge the Court to decide in favor of the landlord. Although Kagan has attempted to distance herself from such decisions, it begs the question whether or not this ideological position may resurface. Kagan’s past position in favor of religious freedom over the rights of tenants, who stand to suffer housing discrimination due to such individuals “beliefs”, is worrisome. This position leaves a dangerous opportunity for other types of discrimination such as race, sexual orientation, etc., which according to the same logic, could be considered permissible for landlords.

Increase in enforcement efforts felt nationwide with new HUD policy:
A new policy called the Recovery Act was enacted shortly after President Obama took office which allocated almost $14 billion to HUD to enforce discrimination cases and demonstrates a new effort by the Department of Justice to increase its enforcement of fair housing practices. According to HUD spokesperson, in the past year, 44% of housing discrimination complaints involved issues around disability, with race discrimination cases at 33% of the total. The Milwaukee Fair Housing Council reports that disability cases represent roughly 50% of cases brought under the Fair Housing Act.

HUD reinforces support of ADA claims under FHA:
The Department of Justice has brought a case on behalf of a 52 year old disabled man who was a resident of an apartment complex where he was not given accomodations for his disability. The tenant was told not to park in a space closer to his door and when he requested a closer parking space it was denied. Soon after the tenant requested this closer parking space he slipped on ice while walking across the lot form the space where he was told to park and injured himself. After repeated requests for accommodation after his injury and being denied, the tenant eventually moved from the residence to prevent any further injury. As a result of the property manager’s failure to accommodate the tenant, which according to a HUD spokesperson is a required for FHA compliance when asked by a disabled tenantnot only suffered injury but also the inconvenience of relocating. The defendant denies the allegations and claims that the facts were inaccurate and they do not discriminate against disabled tenants. However if the property owner is found to have engaged in discrimination, up $16,000 in penalties may be imposed.

HUD will launch mortgage discrimination Investigations:
HUD will launch an Investigation to determine if lenders have violated the Fair Housing Act in their lending practices. The investigation is in response to a New York Times article titled "Seeking a Mortgage? Don’t Get Pregnant", which claimed that mortgage companies were guilty of denying pregnant women mortgages due to their temporary disability status (or leave of absence taken by parents to care for a newborn child) which results in a reduction in income. The crackdown by mortgage companies on home loans came with the stricter regulation of Freddie Mac and Fannie Mae. The lenders now take a harder and longer look at the qualifications of prospective borrowers which includes verifying income right before closing. Both Freddie and Fannie require enough income to cover loan, however the borrower must also show this “guaranteed income” will continue for three years following the application, which may not be apparent in the income of the temporarily unemployed (due to leave of absence) applicant. In some cases, lenders using a new mother’s disability payments as qualifying income will not grant the loans, even if she returns to work. In one case, a mother was denied a mortgage once the lender discovered she was on maternity leave assuming that her income was coming from disability payments. Once the applicant provided proof via the employer that her income remained unchanged during her leave and that she was still earning her full salary,she was able to qualify. This sort of knee-jerk reaction to a non-active employee receiving (partial or full) income,can appear to be indicative of discriminatory practices. In defense of the mortgage lenders, a representative of Mortgage Center states that the extra care is just “prudent underwriting”. The brokerage firm representative explains that if Fannie or Freddie, the purchasers of most mortgages, find that a borrower does not meet the requirements, they can require the lender to buy the loan back. Apparently the lenders caution is warranted as the number of repurchases by lenders has increased in recent years.

HUD decision sends retaliation warning to landlords:
An Iowa landlord was ordered to pay $52,150 to a single mother of three for retaliating against her for filing a housing discrimination complaint. The mother filed a complaint after being denied an apartment; she alleged that she was unjustly charged a higher security deposit because of her sex. HUD did not find evidence of sex discrimination, but did find that the landlord retaliated against her for filing a complaint. As result the administrative judge found in favor of the tenant awarding her $20,150 in damages and a civil penalty for $32,000. HUD representatives stated that retaliation against a tenant for exercising their rights will not be tolerated.

DOJ files steps in to end landlord’s discriminatory practices:
The Department of Justice filed a lawsuit against the owner and former manager of a 268-unit apartment building in Renton, Washington for violating the Fair Housing Act by discriminating on the basis of race, color, national origin and familial status. The complaint stated that the management company steered Indian, African Americans, and Hispanics and families with children from the apartment complex. Employees of the apartment complex were the first to complain to the Kings County Office of Civil Rights, who contacted the local Fair Housing Council. The council conducted a study to determine if there was any indication of discriminatory practices and referred it to HUD. HUD found reasonable cause and the defendants chose to have the case heard before the federal court rather than in an administrative court. U.S. Attorney for the Western District of Washington Jenny A. Durkan, stated "few things are more fundamental to success and happiness than having a safe place to live. Fair and equal access to housing is a cornerstone of our society." The complaint is based on the management company’s unlawful conduct and seeks monetary damages for harm suffered by the “defendant’s actions, civil penalties and a court order barring future discrimination.

Fair Housing Report released at conference in New Orleans:
The Department of Housing and Urban Development releases first annual report of the state of fair housing which provides the progress being made in enforcing the Fair Housing Act and expresses the current administration’s commitment to ending housing discrimination. The report ,prepared in accordance with Sections 808(e)(2) and (6) of the Fair Housing Act and Section 561(j) of the Housing and Community Development Act of 1987, was released during HUD’s National Fair Housing Policy Conference in New Orleans July 19-23. According to the report the most prevalent type of housing discrimination continues to be complaints dealing with disability issues, making up 44% of complaints with 31% race and 20% familial status. The report also includes recent changes in policy, and provides cases that were resolved through the HUD process. Recent cases can be found in the report available at

Jul 19, 2010

Recent Cases (cont.)

Petty v. Portofino Council of Co-Owners, Inc., 2010 U.S. Dist. LEXIS 22935 (March 12, 2010)

The plaintiffs, Jeffrey, Cindy and Christopher Petty's charged defendants, the Portofino Council of Co-Owners, Inc., with violating the Fair Housing Act, along with violating state laws regulating defamation, libel, slander, negligent misrepresentation, breach of fiduciary duty, and intentional infliction of emotional distress. The Defendant responded to the claims by filing a motion to dismiss.

The Pettys purchased a home in Corpus Christi, Texas and claim that they were harassed by the defendant in a variety of ways including the disconnection of their phone lines, which interfered with providing the proper care for their deaf son. Additionally, reasonable accommodations were denied the plaintiffs by limiting their ability to take the son’s service dog through the building so that the dog could relieve itself outside. The plaintiff not only claims that the defendant failed to make reasonable accommodations for their deaf son but also regulated the plaintiff’s children’s access to common areas in the condominium which affected their accessiblity to the dwelling. Lastly the plaintiffs charged the defendant with intimidating potential buyers of the plaintiff’s condominium and denying their application.

The Plaintiffs brought a familial status claim under Fair Housing Act §§ 3604(a)-(b), and a section 3617 claim. The plaintiffs demonstarted that defendant's discrimination affected the availability of the housing, and not merely the habitability of the housing, as required to make to make a valid claim. The court denied the defendants motion to dismiss and stated that the plaintiff’s claims were valid. The court agreed that the defendant’s actions limited the tenant’s availability to housing by making the entrances to the condo inaccessible to the tenant’s children and pets. In addition, the defendant blocked the plaintiff’s attempt to sell the condo. This pecuniary loss is what the court used to establish the injury suffered by the plaintiffs, which is a required element of the FHA claim.

The plaintiffs also filed a Disability Claim under FHA §3604 (f) and 3617, which prohibits discrimination in the sale or rental [of a property] or in any other way making dwelling unavailable for sale or rent due to disability. The court found that the failure to make reasonable accommodations for the plaintiff's son constituted discrimination based on a person's disability.

The state claims made by the plaintiffs include Negligent Representation, Breach of Fiduciary Duty and Intentional Infliction of Emotional Distress. The plaintiffs were unable to satisfy the requirements for the first claim which alleged that the defendants negligently represented that the plaintiff/homeowner, Jeff Petty, was a hacker. For the second claim the plaintiff attempted to establish that there was a “confidence…to act with good conscience and good faith…” between the two parties, or a fiduciary duty, due to their association as co-owners. However, case law has established that no duty exists between co-owner associates.

Finally, the court denied the defendants motion to dismiss the plaintiff's claim for Intentional Infliction of Emotional Distress for any acts that occurred after to May 8, 2007. The plaintiff attempted to establish that there had been continued violation of the Fair Housing Act by including the claims prior to this date, however the motion to dismiss was granted for those claims regarding acts which took place before May 8, 2007 and outside of the statute of limitations.

Ojo v. Farmers Group, Inc., 600 F.3d 1201 (9th Cir. 2010)

African American homeowner, Patrick O. Ojo complained that the Farmers Group insurance practices resulted in disparate treatment under FHA as a result of insurance company’s use of credit scores as a qualifying factor in determining insurance rate. Complainant claims that using credit scores factor that had a “racially disparate impact”

The district court found that the there was reverse preemption under the McCarran-Ferguson Act (MFA) 15 USC § 1012 (b) and Texas Insurance Code sections 544.002; 544.002, 559.051 and 559.052 . According to the MFA no federal law can “invalidate or impair or supersede” any state law made to regulate the insurance business. In other words, the state law, in this case the Texas Insurance Code which permits the use of credit scoring, allows the insurers to get around the FHA law against disparate impact on minorities because the Texas Insurance Code permissive law. In this case the state law would pre-empt the federal law. In most cases, it is the federal law which pre-empts the state law.

Ojo appealed and the three judge panel reversed the decision and held that “Texas law does not reverse preempt” the FHA claim. However the 9th Circuit Court of Appeals ultimately certified the unprecedented question of whether the Texas Insurance Code, in fact, reverse preempts (or overrides) the FHA claim because it has a “legally sufficient non-discriminatory reason” under the Insurance Code for using the credit scoring factor resulting in disparate impact.

Jul 13, 2010

Recent Cases

Marshall Fincher v. South Bend Heritage Foundation, 606 F.3d 331 (7th Cir. 2010)

Fincher, tenant, sued the landlord after being denied Section 8 housing based on a prior eviction,claiming he was denied due process of law and suffered the effects of a breach of contract between the defendant and Housing and Urban Development Contract. The District Court a granted summary judgment to the defendant and the Appellate Court affirmed.

The Plaintiff brought a complaint against both the South Bend Housing Authority and the South Bend Heritage Foundation. The case against the Housing Authority was remanded to the state courts because the eviction process involved in the claim against the state agency is inherently a state issue. In the complaint against SBHF the plaintiff stated that did not have the opportunity to exercise his due process rights and that he was a party to the contract between the landlord and HUD because he was the recipient of the benefit.

The Appellate Court denied both claims. Pertaining to the first claim, the plaintiff concedes that there is well established case law for the 7th Circuit in Edison v. Pierce, 745 f.2d 453 (7th Cir. 1984) which states that recipients of Section 8 benefit have no right to due process when rejected from a specific housing unit, however, he asks that the Court overturn this precedent. With no new changes in law or flaws in the reason of the case exist to justify a overturn the Court’s previous decision. Secondly the Court rejected Fincher’s claim that he is third party-beneficiary to the contract between SBHF and HUD because he did not produce the contract or identify and any provisions (as required to establish an issue of law) that would establish the basis of his claim.

Equal Rights Center v. Archstone Multifamily Series I Trust, 602 F.3d 597 (4th Cir 2010)

The Equal Rights Center brought a claim against Archstone, Niles Bolton, and others for failure to comply with the FHA and ADA in the design and construction of 71 apartment buildings. Archstone, the apartment owners, sought to indemnify themselves against FHA and ADA by making the architect liable. The owners appealed and the appellate court affirmed the District Court’s decision to grant a summary judgment to the defendant, and deny the owner the motion to amend the complaint for contribution. The 4th Circuit Court of Appeals stated that the law was “non-delegable” and that the owner could not insulate himself from responsibility to meet requirements and that the purpose of both the FHA and ADA would have been undermined by allowing the architect to be held liable because it would not make the intended parties accountable or responsive to the law.

Archstone settled with the Equal Rights plaintiffs and filed a cross claim against Niles Bolton, the architect asserting several state-law based causes of action including express indemnity, implied indemnity, breach of contract, and professional negligence. Essentially it is Archstones position that the contract between the owner and the architect provides that the Architect make good defects that result from the architect’s failure to meet the professional standard of care. Archstone in its third party complaint, sought to recover damages, attorney’s fees and costs paid by Archstone to the Equal Rights plaintiffs and recover costs for retrofitting the portions of properties that didn’t meet ADA and FHA requirements. The Court found first, that the claims by Archstone were preempted under the federal law and secondly that the intent to recover losses and damages resulting from the non-compliance represented de facto indemnification from the federal statutes.

Finally, Archstone attempted to amend its complaint to include a claim for contribution, which the district court denied because it changed the nature of the claim regarding the liability and would therefore require additional discovery and “change the character of the litigation”, the appellate court agreed and affirmed the district ‘ decision to deny the amendment.

HUD Acts to Strengthen Anti-Discrimmination Policies in Recognition of LGBT Pride Month

In celebration of LGBT Pride Month the U.S. Depart of Housing and Urban Development (HUD) announced an update in policy which proposes new methods for addressing LGBT individuals faced with housing discrimination. The Fair Housing Act does not address housing discrimination based on sexual orientation specifically, nor does it cover gender identity-based discrimination. However, HUD Secretary Shaun Donovan suggest that these types of issues could be addressed using other protect groups, for example LGBT parties could claim gender discrimination or discrimination based on a perceived disability.
The announcement by HUD regarding adding stronger policy, also encourages individuals to look at state laws and other local protections such as are enacted in approx. 20 states and a number of municipalities, which prohibit LGBT discrimination. HUD says local laws are not used in place of HUD but that they (local laws) can work in concert with the administrative efforts of HUD. Tenants can still file a complaint under the Fair Housing Act in federal district court.
The uncertainty of the economy makes housing an issue for all; however, according to National Center for Transgender Equality, those susceptible to discrimination, such as the LGBT community among others, find themselves especially vulnerable when no laws explicitly address these issues. Currently a significant number of transgender people are suffering eviction or homeless due to the lack of firm policy addressing LGBT non-discrimination. For this reason advocates want to see stronger law enacted to protect the housing of transgender tenants.
Three new bills are pending in the House, which would add specific language that speaks to discrimination in housing based on sexual orientation or gender identity. In addition to the efforts of some elected officials to pass more meaningful and impactful law, HUD has also taken steps to address such discrimination, including proposing policy that would address the issue in the core HUD housing programs requiring participant’s compliance with any local anti-discrimination laws addressing sexual orientation and gender identity. Mortgage and loan discrimination based on the same type of discrimination is also a target for reform. Though these changes in policy still must face review by the public and the laws must be voted though the House, these are long awaited steps in the right direction.

Apr 9, 2010

News Roundup: March 27 - April 2

HUD Kicks Off Fair Housing Month Declaring 2010 a "Time to Act"
In an April 1st press release, HUD highlighted its achievements from last year and proclaimed its continuing commitment to ensure Fair Housing for all in the year to come.

“Discrimination based on how you look, the religion you practice, or because you have children or are disabled is illegal and unacceptable,” said John TrasviƱa, Assistant Secretary for Fair Housing and Equal Opportunity at HUD. “In the aftermath of Dr. Martin Luther King Jr.’s assassination in April 1968, President Johnson moved for passage of the Fair Housing Act to bring the nation forward and together. Since then, we have made progress but there remains work to be done. It is time to act.” (Full Press Release Here)

Massachusetts AG Obtains Consent Judgment on Craigslist Advertisements
The judgment resolves allegations that a landlord made discriminatory statements in rental advertisements posted on Craigslist for including the phrase "no section 8." Such language violates the "source of income" provision in Massachusetts Fair Housing Statute, a provision notably absent from the Federal Fair Housing Act.

The case is "the result of a continuing statewide investigation by the Attorney General’s Office into reports of widespread discriminatory housing advertisements on the Internet." On October 28, 2009, the Attorney General’s Office reached 20 settlements and filed six complaints against landlords and real estate agents across the Commonwealth accused of violating state anti-discrimination laws on Craigslist.

“As more families face tough financial times and have no choice but to rent, landlords and real estate professionals must recognize that the rental market is a regulated industry and compliance with our anti-discrimination laws is an important obligation,” said Attorney General Coakley. “While we hope that this enforcement initiative will have a deterrent effect, our office will continue to monitor Craigslist and take action against persons and entities that violate the law.” (Full Press Release Here)

Are Emotional Support Dogs Protected by the FHA?
As is clear from the HUD press release, service dogs assisting persons with disabilities are usually covered by the FHA under the reasonable accommodation provision. Less clear however, is whether the FHA will protect residents from being forced to give up "emotional support" animals when private housing rules place limitations on pet ownership.

In Harford County Maryland, a father and daughter are fighting a condo association's determination that they must find another home for their dog because it exceeds the one dog only policy. The second dog, Jack, came into the family to assist the mother during her last few months to live while suffering from stage 4 colon cancer.

While such a case might seem to elicit sympathy, whether such circumstances demand the force of law seems unlikely. (Full Article Here)

JMLS to Host Fair Housing Law Program on April 16 and 17
The John Marshall Law School Fair Housing Legal Support Center is presenting the program "Fair Housing Law and Enforcement: A Basic Survey of the Law and Practice."

The cost is $300 and Attorneys can receive 10 CLE credits. To register contact Maria Chavez at (312) 427-9438 or (Full News-brief Here)

Mar 30, 2010

News Roundup: March 15-26

NFHA President Testifies Before House Judiciary Committee
(Reading the full testimony is strongly recommended for anyone interested Fair Housing issues.)

On March 11, Shanna Smith of the National Fair Housing Alliance (NHFA) testified before the House Judiciary Committee's Subcommitte on the Constitution, Civil Rights and Civil Liberties, with a presentation titled "Protecting the American Dream: A Look at the Fair Housing Act."

The testimony emphasizes that in spite of our efforts, the nation still falls "dramatically short of reaching the actual goals of the Fair Housing Act" which is designed to "eliminate housing discrimination and to promote residential integration." "While people are working together in greater numbers than ever before--many go home each night to racially segregated neighborhoods."

Shanna "explores the nature and extent of housing discrimination as it is manifested today, how enforcement action is moving from the individual case by case format to addressing systemic segregation and discrimination, albeit slowly, and why systemic enforcement actions using disparate impact arguments can make important and needed progress in achieving the Congressional intent of the law. I also discuss how the Fair Housing Act could still be improved to fight discrimination against additional protected classes and to address other issues that have arisen since 1968. Finally, I discuss the recommendations necessary to make enforcement of the law effective." (Full Testimony Here)

The issue highlights numerous significant developments in the Fair Housing field.

HUD Launches Website to Gather Public Comment on LGBT Housing Discrimination Study
It is no longer necessary to attend one of HUD's official LGBT discrimination study listening sessions after the introduction of a new website that allows for public comment over the internet (Press Release and "Online Suggestion Box").

Can the FHA prohibit racist expressions where the first amendment does not?
Michael Corrigan, 62, of West Beverly neighborhood in Chicago, had signs on his property for nearly a year which read, "Say no to the ghetto," "White power," "Mt. Greenwood - the next Englewood," a sticker reading "White Pride Worldwide," and a tiny noose hanging from his garage.

Chicago Human Relations Commission chairman Dana Starks stated that the display "may have crossed the line into violations of federal and state fair housing laws that prohibit interferences with the purchase and sale of housing based on race."

The Commission is urging federal and state authorities to take notice of the issue and possibly charge Corrigan for any violations they may find.

Spokesman Kenneth Gunn of the Commission suggested that the signs may have a "chilling effect" on minorities looking to buy a home in the area (Chicago Examiner Article).

Recently, Fox News, through a freedom of information request, obtained a copy of the letter sent to the United State's Attorney General Eric Holder by the Chicago Commission on Human Relations in which "Commissioner Starks said the Chicago Fair Housing Ordinance is not applicable in this case, but the federal Fair Housing Act is. The Act allows for the feds to take action when intimidation is used to discourage people from buying a home because of their race."

Can the FHA prohibit offers of "free rent" to females posted on Craigslist?
The Housing Opportunities Made Equal of Virginia (HOME) has filed 20 complaints with HUD over Craigslist ads offering free rent to women, some of which detail feature characteristics like light skin, and are thought to be solicitations for sex.

Can the FHA's prohibition on advertisements targeted towards a specific gender help stop these alleged offers of sex for housing? Investigator Amy Nelson of HOME believes it can (Full Article Here).

Another Craigslist Quandary: "Bro Palace-America"
The ad seeks a "bro of epic proportions" to join a group of bros who "like to party hard and bang chicks even harder…in this "Temple to Broseidon." Is there a way around NIMBY? (Full Article Here).

New Book, 'Not in My Neighborhood: How Bigotry Shaped a Great American City' by Antero Pietila
"The bottom line is this: Gentiles excluded Jews and blacks from their neighborhoods using both legal and illegal means. Unscrupulous speculators took advantage of home sellers and buyers. Mortgage companies redlined neighborhoods where people could not get a regular mortgage, forcing them to rely on unscrupulous rent-to-buy schemes. With blockbusting techniques, flipping, and subprime mortgages, Baltimore neighborhoods and bank accounts were destroyed - to say nothing of people's souls" (Baltimore Sun Review).

News Roundup: March 8-14

LGBT Developments
National Gay and Lesbian Task Force calls on federal lawmakers to amend the FHA.

Congressman Joe Sestak announced the submission of his Housing Non-Discrimination Act to amend the FHA so that it includes a prohibition on discrimination of LGBT persons.

Subsidiaries of American International Group have agreed to settle over allegations of charging higher broker fees for subprime loans to African American borrowers for a total of $7.1 million. This marks the first case in which a lender has been charged for such fee discrimination.

The Miami Valley Fair Housing Center filed a discrimination suit against The Connor Group for posting a Craigslist advertisement that read: "a great bachelor pad for any single man looking to hook up." It is being alleged that the advertisement discriminates against women by showing a preference for single males.

A federal judge has given the city of Baltimore more time to narrow its allegations against Wells Fargo for targeting black neighborhoods for bad loans which have resulted in foreclosures costing the city tens of millions of dollars. See here for analysis of the original dismissal.

"The Green Book" 2010 supplement, the Bible outlining the laws and rights of tenants and applicants of HUD assisted housing, is now available.

Mar 10, 2010

What Obama's Proposed Inclusionary LGBT Housing Rule Does and Does Not Do

The U.S. Housing and Urban Development Department conducted a listening session on Thursday in an effort to gather input on how to design the first-ever national survey of LGBT housing discrimination. The session was hosted at Chicago's city hall and included over a dozen members of the gay community, fair housing advocates and government officials who shared their stories and perspectives on the issue. (Full Washington Post article here).

One concern expressed the need for testers to "think of a way to make it clear that this is a gay couple and not just two men who really can't afford to do anything than get a single apartment with a single room," said John Knight of the ACLU.

This marks one of the first steps by HUD to fulfill their promise made in October of assuring the LGBT community inclusion in HUD programs. (Full Press Release Here).

In that press release HUD Secretary Shaun Donovan announced, "The evidence is clear that some are denied the opportunity to make housing choices in our nation based on who they are and that must end. President Obama and I are determined that a qualified individual and family will not be denied housing choice based on sexual orientation or gender identity."

The administration intends to achieve this goal in three ways:
1) through the promulgation of a rule that clarifies the term "family" in HUD's public housing and Housing Choice Voucher programs to include otherwise eligible LGBT individuals and couples; 2) require grantees and those who participate in the Department's programs to comply with local and state non-discrimination laws that cover sexual orientation or gender identity; 3) specify that any FHA-insured mortgage loan must be based on the credit-worthiness of a borrower and not on unrelated factors or characteristics such as sexual orientation or gender identity.

As evidence that this is an issue of national concern, Michigan in 2007 issued a report finding that nearly 30 percent of same-sex couples were treated differently when seeking housing (Michigan's full report here).

What does this mean for the LGBT and fair housing communities?

First, the rule does not change the Federal Fair Housing Act to include the LGBT community. LGBT persons can still be denied the sale or rental of housing on the basis of this status under federal law. While many people have expressed disappointment with this deficiency in the proposed rule, such a revision of the FHA would almost certainly be struck down in the federal courts on the basis that the President exceeded his executive powers in an attempt to legislate from the White House. The only promulgation I could conceive of as possibly escaping this Separation of Powers issue is HUD rule defining the meaning of "sex" to include gay, lesbian, bi, and transgender persons. While court's are required to grant Administrative agencies great deference in their interpretations of statutes, the courts would likely strike the rule down as an abuse of discretion in statutory interpretation.

Though the rule does not propose to change the FHA, the commissioned national study likely has that purpose. The release of that report will be used by LGBT and equal rights interest groups to place pressure on the legislature to pass an LGBT inclusive amendment. It is important to note however that while federal law is deficient in this area, 17 states and 80 cities have included LGBT provisions in their own housing laws.

Second, as many are unaware, The Housing Choice Voucher Program refers to what is more widely known as Section 8 housing. The proposed rule would make it illegal for HUD to discriminate against the LGBT community in the distribution of these housing subsidies. Presently, HUD agents could deny such vouchers to LGBT couples on the basis that they do not fit within the program's definition of family; hence the rule clarifying what "family" actually means in order to include LGBT persons.

Third, if my reading of the press release is accurate, the new rule would require landlords receiving section 8 vouchers to comply with those state and municipal laws that have LGBT inclusive provisions.

Finally, the rule would prohibit the Federal Housing Administration, a government agency created in 1934 under the National Housing Act to provide home financing through the insurance of mortgage loans, from discriminating against the LGBT community in the granting of FHA-insured mortgages. More on FHA insured mortgages here.

Mar 9, 2010

Children in Search of a Place to Play

While the bylaws prohibit anyone from playing organized sports on the grounds of the complex, the condo association is being sued for discriminatory enforcement of condo rules against families with children. See full article here.

More Stringent Standard for Organizational Standing and the Need to Keep an Eye on this Issue.

Equal Rights Ctr. v. Post Props. 657 F. Supp. 2d 197 (D.D.C. 2009)

Decided September 28, 2009

This case stands on the principle that organizational standing is not available when an organization's injury is self-inflicted. Whether we are seeing a more stringent principle being promulgated, a refinement in the law or a case of bad strategy is unclear.

Equal Rights Center ("ERC"), an organization devoted to advancing civil rights and fair housing for everyone, brought suit against Post Properties for allegedly failing to bring their buildings into compliance with accessibility provisions in the American Disabilities Act ("ADA") and Fair Housing Act ("FHA"). Post Properties owns and manages more than 21,000 apartment units across five states. According to the Court's description of the facts, ERC, on its own accord, chose to investigate one of Post's buildings to determine whether they were in compliance with accessibility laws.

The issue in the case is not whether Post actually violated accessibility laws but whether ERC had the authority to file suite and come before the court as an organization. To get before a court of law, Article III of the Constitution requires the plaintiff to have "suffered a concrete and particularized injury that is actual or imminent, traceable to the challenged act, and redressable by [the] court." Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992).

Whether organizations have standing to sue on behalf of injured persons is not at issue here. The issue is whether organizations have standing in their own right, independent of its individual member's injury. While injury to an organization representing the interests of a particular class of persons may seem less concrete and particularized than that of an individual who is unable to rent from Post because a unit's doorway is not wide enough to fit a wheelchair, the Supreme Court has granted organizations standing before the court without necessarily creating a special exception. Haven's Realty Corp v. Coleman, 455 U.S. 363 (1982).

In Haven's, the Court ruled that a nonprofit corporation devoted to equal housing access had standing against a defendant's racial steering practices because steering frustrated its mission to assist minorities in accessing housing. Id. Additionally, the nonprofit, in providing such services, had to expend substantial resources in identifying violations of the law in the community they served. Even if no economic resources had been expended, the court noted that an organization is not deprived of organizational standing when the alleged injury results from the organization's non-economic interest in encouraging open housing. The nonprofit merely has to demonstrate that it "suffered impairment in its role of facilitating open housing." Id. at 379.

According to the court in Equal Rights Center, the standing doctrine in Haven's does not however extend to where a plaintiff's injury "merely consists of the impact on its activities caused by their willful diversion of resources in response to the defendants' conduct." Equal Rights Ctr. v. Post Props. 657 F. Supp. 2d 197 (D.D.C. 2009). Thus, organizational standing will not be found when the injury to the plaintiff is said to be purely self-inflicted and arising solely out of their own decision to expend resources. Id. at 201.

Through its interpretation of the discovery proceedings, the court here determined that ERC essentially conceded that its injuries were caused by its own decision to investigate the Defendant. This lead to the finding that ERC's injuries were purely self-inflicted and thus falling outside the scope of standing law provided in Haven's.

Whether this decision marks a tightening of Organizational Standing law or wrong strategy is unclear. It seems that the court should have recognized that ERC's ability to provide the service of referring persons to handicapped accessible housing was impaired by the Defendant's alleged failure to comply with accessibility standards. The fewer handicapped accessible units (required by law) within a community, the more difficult it will be for ERC to fulfill its mission of providing equal housing to persons with a handicap. It is also possible; however, that ERC did not sufficiently plead this injury; in which case, the court is not required to supplement deficiencies on behalf of either party. (While the true facts of the suite are unclear, it is always prudent to file a case with a bona-fide plaintiff who was looking for accessible housing and join them in the claims against Defendant).

On the other hand, this case, if appealed, may change the interpretation of the long standing requirements set forth in Haven's. Perhaps this case represents a movement away from finding organizational standing in situations where the injury to an organization's mission is less concrete.

Mar 5, 2010

$7.4 Million Retrofitting Case

Retrofitting housing units to comply with accessibility requirements under the FHA for persons with disabilities is expensive. A.G. Spanos Companies, the nation's fifth-largest housing developer, understands this fact quite well after settling for an estimated $7.4 million for non-compliance with FHA building standards.

According to the press release, "Under the agreement, the nation’s fifth largest builder of residential real estate will retrofit properties in Arizona, California, Colorado, Georgia, Florida, Kansas, Missouri, Nevada, New York, North Carolina, and Texas at an estimated cost of $7.4 million."

The FHA provides that since 1991 new construction of multifamily dwellings with four or more units be required to have accessible ground floor units where there is no elevator and accessibility for all units in buildings with an elevator. This is true for both public and private housing except in rare instances where steep terrain makes accessibility standards impracticable.

It is not uncommon, as was the case here, for city building inspectors to approve new construction of housing developments that do not comply with the FHA. This just shows how disparate local building codes are from the FHA requirements. The Fair Housing Accessibility First Initiative was designed to promote compliance nationwide with the FHA. The present settlement will contribute to this initiative in numerous ways that are detailed in the Press Release.

Feb 8, 2010

$160,000 Settlement Reached Over Racial Steering Complaint in Atlanta

Atlanta area realtors settled with the Justice Department on Feb. 3, 2010 over allegations of racially steering prospective home-buyers. The complaint, filed by HUD and the National Fair Housing Alliance, resulted in an investigation which reported that agents were steering white testers away from predominately black neighborhoods because of race. One tester reported that an agent wasn't sure what area to take the prospective home-buyer because he could not tell the testers race from their phone conversation.

Full article here.

Feb 5, 2010

HUD Grants $26 Million to Fair Housing Organizations

In an effort to continue fighting housing discrimination, HUD once again distributes funds to local fair housing agencies across the country.

HUD Press Release

Jan 29, 2010

7th Circuit Carves out More Space for Post-Acquisition FHA Claims

Bloch v. Frischholz, 587 F.3d 771(7th Cir. 2009)

Decided November 13, 2009

The 7th Circuit Court of Appeals unanimously held in Bloch v. Frischholz,that the Fair Housing Act (FHA) protects persons from discrimination not only before, but also after housing has been acquired. Though bright-line rules were not necessarily developed, the court discusses three provisions through which post-acquisition claims can now more clearly be established.

Since 2004, after the Court's decision in Halprin v. Prairie Single Family Homes, the Fair Housing law in the 7th Circuit concerning post-acquisition conduct has been construed very narrowly because as the court stated,"the FHA by and large [is] concerned only [with] access to housing." Id. Halprin has lead many courts to focus on the timing of the discrimination rather than whether discrimination actually occurred. Bloch, to a certain extends, clarifies this area of the law by ruling that the FHA reaches a "range of post-acquisition conduct." Bloch v. Frischhol.

The plaintiff's in Bloch claimed that the condo association's refusal to allow Jewish members to affix a mezuzah (religious symbol) to their door posts violated three provisions of the FHA under post-acquisition legal theories. The court addresses each claim:

Claim 1 - Post-Acquisition Unavailability Through Constructive Eviction

Section 3604(a) of the FHA makes it unlawful "to refuse to sell or rent after the making of a bona fide offer, or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race, color, religion, sex, familial status, or national origin."

This provision is focused on access to housing and is not necessarily targeted at post-acquisition conduct; however, should the post-acquisition discriminatory conduct effectively deny access to already-owned or rented property, 3604(a) may be violated. The plaintiffs argued that the Association's religious discrimination amounted to "constructive eviction," a doctrine in real property whereby a landlord renders property unavailable due to a failure to perform a legal duty (provide heat or water). The issue here is whether by refusing to allow the Bloch's to place the mezuzah outside their door, the association constructively evicted the Bloch's on the basis of religion because the Jewish faith requires the ability of followers to affix a mezuzah to their doorposts.

The issue rested on the court's interpretation of "unavailable." In a case of constructive eviction, the plaintiff must show that the residence is "unfit for occupancy," often to the point that one is "compelled to leave." (Citing Black's Law Dictionary). The Bloch Court provided that diminution of property values, blatant discriminatory acts, or the lack of an elevator service does not cross the unavailability threshold. On the other hand, changing the locks of a tenant without providing the key because of race, or not providing heat on the basis that the tenant has children, would amount to unavailability.

Inseparable from any argument as to whether a unit is unavailable is the question of whether the plaintiff vacated the premises. While the court in Bloch does not establish a bright line rule requiring that the plaintiff vacated the unit, it appears that the plaintiff must either provide evidence that they vacated, or had an intent to vacate the premises but were unable to do so. The Court appears to establish a reasonableness standard in stating that since the the Blochs neither vacated nor provided a reason why they failed to vacate, a reasonable jury would be unable to find that the Association made the unit unavailable.

Thus, a post-acquisition claim under section 3604(a) requires that the premises be made effectively unavailable to its residents because of race, color, religion, sex, familial status, or national origin, and that the residents left the premises or intended to leave but were unable to do so.

Claim 2 - The Right to Inhabit as a Privilege of Sale and Abuse of Contractual Powers.

Section 3604(b) makes it unlawful "[t]o discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race, color, religion, sex, familial status, or national origin."

First, the court finds that a 3604(b) allows for the same constructive eviction theory as under 3604(a) because the availability of housing already acquired is a privilege of sale. Making the premises unavailable is therefore a deprivation of one's right to privileges of sale.

Additionally, a post-acquisition claim can be made under 3604(b) where a resident agrees to subject themselves to rules imposed by a Board as a condition of the housing housing purchase. Should the board enforce those rules in a discriminatory fashion, there may be a 3604(b) violation. For example, if a condo association board rules against leaving trash cans outside a resident's unit, but only penalizes black residents for breaking the rule, the black residents will have a valid post-acquisition 3604(b) claim.

Here, if the Bloch's can show that the condo association selectively enforced, or expanded the scope of the rule in order to specifically target the Bloch's use of the mezuzah, they may prevail on the 3604(b) claim.

Claim 3: Denial of the Right to Full Enjoyment of Premises

Section 3617 makes it unlawful "to coerce, intimidate, threaten, or interfere with any person in the exercise or enjoyment of, or on account of his having exercised or enjoyed, or on account of his having aided or encouraged any other person in the exercise or enjoyment of, any right granted or protected by section 3603, 3604, 3605, or 3606 of this title."

The language of 3617 on its face seems to suggest that for a 3617 action to be valid, the plaintiff must possess a separate cause of action under 3603-3606, of which they tried to exercise, and were later discriminated against on the basis of having that right. A post-acquisition claim under this reading would require one of the above two post-acquisition theories to be satisfied before a 3617 action could be pursued (except with handicapped cases). This provision is usually violated when a person is denied housing on the basis of race (3604) etc. and then is threatened not to pursue legal action for that denial (3617).

However, the court Bloch expands this meaning to allow for a 3617 claimindependent of any other FHA cause of action. This decision almost has the effect of overruling Halprin in that it protects a residents right against discrimination that interferes with the enjoyment of their already acquired housing. This reading is consistent with the intent of the FHA's purpose to "replace the ghettos by truly integrated and balanced living patterns." Trafficante v. Metro. Life Ins. Co., 409 U.S. 205 (1972). Additionally, the court cites HUD's interpretation of 3617 which prohibits "interfering with persons in their enjoyment of a dwelling because of the race [or] religion . . . of such persons." 24 C.F.R. 100.400(c)(2).

While the extent of this protection is to be worked out in the years to come, the court did provide a four part test for 3617 claims: The plaintiff must show that (1) she is a protected individual under the FHA, (2) she was engaged in the exercise or enjoyment of her fair housing rights, (3) the defendants coerced, threatened, intimidated, or interfered with the plaintiff on account of her protected activity under the FHA ("Interference" is more than a "quarrel among neighbors" or an "isolated act of discrimination," but rather is a "pattern of harassment, invidiously motivated."), and (4) the defendants were motivated by an intent to discriminate.

(The Bloch case was remanded and the case is pending before the district court.)

Jan 28, 2010

FHA Reverse Redlining and Pleading Standards

United States District Court, N.D. California
Hafiz v. Greenpoint Mortg. Funding, Inc.
652 F.Supp.2d 1039
July 16, 2009

Hafiz is significant to fair housing law because it re-articulates the manner in which a predatory-lending/reverse-redlining claim can be made under the FHA. It also shows how some courts are using the new more stringent pleading standards under Iqbal to dismiss federal claims.

Plaintiff Majiman Hafiz's investment property was subject to foreclosure after falling behind in her monthly mortgage payments. In order to prevent the foreclosure sale of her property, Plaintiff alleged in her complaint that Defendant, Greenpoint Mortgage, failed to give her adequate time for review of the loan documents. Plaintiff also alleged that Defendant failed to disclose mortgage-related information as required by state and federal law. Plaintiff claimed that these alleged acts of excessive fee structures and failed disclosures on behalf of defendants resulted in the issuance of a loan which was subject to a repayment schedule that would eventually "outstrip" her ability to pay.

Among numerous other alleged violations, plaintiff claimed that defendants violated the Fair Housing Act under the theory of "reverse-redlining" which makes it unlawful for lenders to offer credit to certain classes, people groups, or geographic areas on terms less favorable to persons outside of the targeted people group. Should a lender only offer adjustable rate mortgages to persons of color buying in a particular neighborhood while offering fixed rate mortgages with lower interest rates to whites in the same or different area, such would likely constitute reverse redlining. Redlining on the other hand was the denial of any financial services to persons based on race, etc.

In Hafiz, the court provided a four part test for reverse-redlining violations under the FHA: (1) plaintiff is a member of a protected class; (2) plaintiff applied and was qualified for the loans; (3) the loans were given on grossly unfavorable terms; and (4) that the lender either intentionally targeted plaintiff for unfair loans or currently makes loans on more favorable terms to others. Id. at 1046.

The Court found no FHA violation because the complaint fell short of the relatively new fact pleading threshold requirements under Ashcroft v. Iqbal 129 S.Ct. 1937 (2009). Instead of pleading sufficient factual findings, the plaintiff merely stated legal conclusions of being extended less favorable loans than "Caucasian counterparts." Accordingly, these conclusions were considered to be "couched as factual allegations which are not entitled to a presumption of truth." Id. at 1046. The reverse-redlining claim was ordered insufficient to overcome the motion to dismiss.

Fair Housing 40 Years Later

Provided is news story addressing the issue of fair housing law over the last 40 years.

Link with video.