Fair Housing

Disparate impact under the Fair Housing Act occurs when:

AAn agent intentionally treats members of a protected class differently

BA neutral policy or practice has a disproportionately negative effect on a protected class, even without discriminatory intent✓ Correct

CA landlord openly refuses to rent to members of a protected class

DA lender charges higher interest rates to borrowers of a specific nationality

Explanation

Disparate impact (or adverse impact) theory holds that a facially neutral policy can violate the Fair Housing Act if it disproportionately burdens a protected class and cannot be justified by a legitimate business necessity.

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.

Discount Points

Prepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.