Fair Housing and Fair Lending Laws

Discrimination in housing and lending practices can occur when individuals attempt to rent or buy a dwelling place, apply for insurance for their place of residence, or apply for a mortgage loan. If an entity acts unfavorably or adversely toward individuals in a real estate or credit-related matter because of an individual’s race, color, national origin, religion, sex, marital status, age, or participation in public assistance or Consumer Credit Protection programs, a violation of fair lending and fair housing laws may have occurred.

Types of Discrimination

Particularly in housing and lending matters, discrimination may not occur in a traditional or overt way, such as telling applicants that they will not receive housing or credit opportunities because of their race. Discrimination can also occur through disparate impact. Disparate impact occurs when a practice or policy is applied equally to all members of a group, but still negatively affects a certain group of people in a disproportionate way. For instance, if a lender’s policy prohibits making home loans less than $70,000, this policy might have a more negative impact on lower-income applicants whose home values may be lower.

Lending Discrimination

The Equal Credit Opportunity Act (ECOA) prohibits unfair and discriminatory lending practices. The ECOA specifically prohibits discrimination in credit matters based on an individual’s race, color, national origin, religion, sex, marital status, age, participation in public assistance programs, or participation in Consumer Credit Protection services.

Individuals and entities are also prohibited from discriminatory practices in mortgage lending. Actions such as refusing to make a mortgage loan based on one of the protected characteristics of the applicant, setting different lending conditions based on applicant characteristics, and discriminating in appraising property are prohibited by fair lending laws. This prohibition of discriminatory practices protects not only individuals but also small businesses, corporations, trusts, and partnerships. If individuals believe that they are victims of lending discrimination, they should file a complaint with the Consumer Financial Protection Bureau (CFPB).

Once a complaint has been filed with the CFPB, the agency will forward the complaint to the alleged discriminating party and await a response. The party then has 15 days to issue a response. The CFPB will also determine whether another agency might better serve the complainant. If the CFPB locates another agency, the CFPB will forward the individual’s complaint to that agency. Otherwise, the CFPB will attempt to resolve the complaint.

Housing Discrimination

The Fair Housing Act (FHA), which is Title VIII of the Civil Rights Act of 1968, prohibits discrimination based on race, color, national origin, religion, sex, family status (i.e. discriminating against a party because he or she has children under 18), or disability, in the areas of sale, rental, or financing of residential dwellings and other housing-related processes. If individuals believe that they are victims of housing discrimination, they must file a Housing Complaint Form with the federal department of Housing and Urban Development (HUD). Individuals can file the form in person at a local branch office or submit an online form.

Examples of actions prohibited by the FHA are refusing to rent, negotiate, or sell housing, making housing unavailable, and setting different terms for sale or rental of a residence depending on the applicant. Furthermore, if an individual is disabled and renting a property, the FHA requires the landlord to allow the individual to make reasonable modifications to housing, if it is necessary for the individual to live there. These modifications would be at the resident’s expense, however. The landlord must also make reasonable accommodations for a disabled individual so that the individual may live in the residence.

Individuals can file a complaint up to one year after the alleged discrimination occurred. A fair housing specialist then performs an investigation to determine whether there is a substantial basis for the claim. If a basis for a claim has been established, a formal housing discrimination complaint is filed.


After the formal filing of a complaint, HUD will attempt to reach an agreement with the person or entity against which the complaint was filed. This is called a conciliation agreement. In the agreement, the party in violation of FHA rules will agree to take the necessary and specific steps to remedy the violation. If an agreement is signed, HUD will take no further action. However, if the conciliation agreement is later breached, HUD will recommend that the Attorney General initiate a cause of action against the discriminating party.

Additionally, just like the CFPB, HUD may refer a complaint to another state or local agency for investigation if that agency has the same fair housing authority. HUD will notify the complainant upon transfer of his or her complaint. That new agency must begin work on the complaint within 30 days. If the new agency fails to take action in the proper time, HUD has the option of reclaiming the complaint and continuing to process it.

If HUD finds that an individual or entity engaged in discriminatory practices, HUD will file a complaint to be heard by an administrative law judge. The complainant or violating company can also request that the case be heard in federal district court. There is no cost to the complainant if he or she makes this request.

The Administrative Hearing

If an administrative law judge decides that a party has engaged in discriminatory practices, the violating party can be ordered:

  • To compensate for actual and punitive damages;
  • To provide injunctive relief, such as making the housing available to the complainant;
  • To pay a penalty to the federal government; and
  • To pay attorney's fees.


If the complainant or the alleged violating entity chooses to move the case to Federal District Court, the Attorney General will file a suit and litigate on behalf of the complainant. Like the administrative law judge, the District Court can order relief and award actual and punitive damages and attorney's fees. A complainant is permitted to bring suit even after filing a complaint, as long as no conciliation agreement has been signed and an administrative law judge has not initiated a hearing.