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This Stops Today: NYC Policing Reforms One Year After Eric Garner
Thursday, February 20, 2014
In American Insurance Association v. HUD, homeowner’s trade organizations are asking a federal court to strike a key provision of the Fair Housing Act of 1968 (FHA). LDF filed a friend-of-the-court brief in support of robust enforcement mechanisms available under the FHA.
As LDF’s brief makes clear, our nation has a long history of shameful, and often purposefully discriminatory, underwriting practices in the homeowner’s insurance market. For many decades, insurers unabashedly treated homeowners seeking insurance differently based on their race or the racial composition of the neighborhoods in which they lived, a practice known as “insurance redlining.” Insurance redlining and other discriminatory treatment played a significant role in creating or perpetuating residential segregation, which the FHA was intended to break down.
While enforcement of the FHA has led to a decline in such overtly discriminatory practices, insurers have continued to use neutral underwriting criteria that cause minority homeowners, and homeowners who live in heavily minority neighborhoods, to have their applications rejected more frequently and, where they do secure insurance, to pay higher premiums. For example, underwriting guidelines sometimes arbitrarily require that a home's market value meet or exceed a certain threshold in order to be eligible for homeowner’s insurance. But, as a result of historic and persistent residential segregation, African American and Latino homes are less likely to meet such threshold market values and therefore are ineligible for coverage. This practice has been found to unjustifiably leave African American and Latino families less able than other families to protect, repair, or replace their homes in the event of a disaster.
Public and private housing practices that have an unjustified and disproportionately harmful effect, or “disparate impact,” on racial minorities are prohibited by the FHA. Thus, disparate impact enforcement remains vital to protecting homeowners of all races and to promoting the vitality and stability of diverse communities. The FHA’s prohibition against such forms of disparate impact discrimination has been consistently acknowledged by federal courts and by the U.S. Department of Housing and Urban Development (HUD), which codified its long-standing interpretation in a final rule promulgated last year. LDF’s brief urges the court to uphold the HUD regulation and dismiss the insurance companies’ lawsuit. For LDF’s statement applauding HUD for issuing these regulations, see here.