Fair Housing

What is 'disparate impact' under the Fair Housing Act?

AOvert, intentional discrimination against a protected class

BA facially neutral policy that has a disproportionate adverse effect on a protected class without sufficient justification✓ Correct

CThe difference in property values between neighborhoods of different racial compositions

DThe unequal application of rental criteria to different applicants

Explanation

Disparate impact theory holds that a housing policy may violate the Fair Housing Act even without discriminatory intent if it has a disproportionate adverse effect on a protected class and the provider cannot demonstrate the policy is necessary and there is no less discriminatory alternative.

People Also Study

Key Terms to Know

Fair Housing Act

Federal law prohibiting discrimination in the sale, rental, or financing of housing based on race, color, national origin, religion, sex, disability, and familial status.

Steering

An illegal practice where a real estate agent directs buyers toward or away from certain neighborhoods based on the buyer's race, religion, national origin, or other protected characteristics.

Redlining

An illegal practice where lenders or insurers deny services or charge higher rates in certain neighborhoods based on the racial or ethnic composition of those areas.

Private Mortgage Insurance (PMI)

Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.