Supreme Court to hear fair housing

Supreme Court to hear fair housing case that could impact mortgage industry

November 22, 2011 By Steve Dibert Leave a Comment

The Supreme Court of the United States

Kerry Curry, Housing Wire

A fair housing case headed to the Supreme Court could have direct and indirect impacts on mortgage lending and regulatory enforcement.

The nation’s highest court will decide whether plaintiffs suing under the Fair Housing Act may bring disparate impact claims and, if so, what the proper test for such claims would be.

The act prohibits housing discrimination on the basis of race, color, religion, sex, familial status or national origin. In Magner v. Gallagher, a group of rental property owners in St. Paul, Minn., sued the city and several officials, over aggressive code enforcement.

In 2002, St. Paul got tough on problem rental properties, doing sweeps for housing code violations and requiring code compliance certification on the properties. The city allegedly forced rental owners to make expensive renovations. The enforcement resulted in increased maintenance costs, condemnations and some forced selling of properties, the landlords alleged. They claim the city violated the Fair Housing Act through its get-tough enforcement, which ultimately reduced availability of affordable housing in the city and negatively impacted lower-income and minority residents.

The trial judge dismissed the case on summary judgment, citing insufficient evidence of disparate impact. On appeal, the 8th Circuit Court reversed the case in respect to disparate impact while upholding other parts of the trial court’s summary judgment.

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