April 11th marked the 54th anniversary of the Fair Housing Act which protects individuals from discrimination when they are renting or buying a home, getting a mortgage, seeking housing assistance, or engaging in other housing-related activities.
While there have been great strides made by the U.S. Department of Housing and Urban Development (HUD) and other regulatory agencies, there's still work to be done.
Over the past year, the HUD has continued to focus on strengthening fair housing protections and enforcement. Actions to support this focus highlighted in HUD's recent press release include:
- Fighting discrimination related to the pandemic
- Protecting the LGBTQ+ community against housing discrimination
- Restoring the Affirmatively Furthering Fair Housing Requirement
- Restoring the Discriminatory Effects Rule
- Withdrawal of the "mixed status" rule
- Fighting disability discrimination
- Launched a whole-of-government plan for wide-ranging reforms to advance equity in home appraisals
- Affirmed the use of special purpose credit programs
- Set the stage for increased fair housing and lending enforcement access
While all of these actions by the HUD are notable and impactful, there are still individuals throughout the country who aren't being treated fairly in the housing industry.
Previously, I have shared a bit about my parents’ journey into homeownership, which didn't occur until I had reached my freshman year of high school. Some might think that their journey should have occurred much sooner, considering that my father had served in the United States Army and upon being honorably discharged, he had access to the rights earned by veterans-including being able to purchase a home using a VA Loan product. Unfortunately, during the 1960s, banks were not providing mortgage loans in many minority neighborhoods and there were homes in white neighborhoods that had discriminatory covenant restrictions that restricted the sale of some homes to blacks.
Discrimination in housing resulted in the creation of a generational wealth gap that still exists in many minorities communities to this very day. Less than half of the Black American population are homeowners compared to three-quarters of White Americans. Widening the gap even more is the discovery of appraisal discrimination that has resulted in the devaluing of homes owned by minorities.
But, to be clear, the issues are not just black and white. Discrimination rears its ugliness in many ways, including against those with disabilities and others because of a person's sex or familial status.
This is why laws like the Fair Housing Act remain so critical, because, here we are, 54 years later and there are still individuals that need to seek the protections covered under this act. It is also why mortgage companies must do all that they can to offer products that allow access and create marketing campaigns that speak to a wide range of consumers, regardless of their race, color, religion, sex, national origin, familial status, or disability. It is also why compliance monitoring is so important-you can discover the problems that could lead to regulatory woes.
Best Practices for Compliance
While the Fair Housing Act has been in place for 50+ years, there has been a heightened regulatory focus on fair lending in recent years. And, intentional or not, any type of discrimination by mortgage companies is unacceptable and could lead to significant consequences.
Taking a proactive approach to compliance is always better than taking a reactive approach.
Here are some quick best practices that can help your organization minimize fair lending compliance risk:
- Update fair lending policy statements and review them often
- Have regular, required fair lending training for employees, officers, and board members
- Monitor for compliance with fair lending policies and procedures
- Perform regular statistical analysis for disparities based on prohibited class in pricing, underwriting, or other aspects of credit transaction
- Conduct regular assessment of marketing materials, copy, and campaigns for any instances of fair lending violations
- Monitor and analyze internal and external complaints from consumers
- Offer controlled messaging and copy that's pre-approved by the compliance department
- Understand how geographic filters are being used in algorithms to avoid the risk of redlining
- Monitor all marketing and outreach activities as part of your larger fair lending risk management programs
I have dedicated my professional career to helping people in all of the protected classes listed under the Fair Housing Act. I took very seriously my role in ensuring compliance in all areas where I was responsible while working in the mortgage industry. It is why I am here at PerformLine, because I firmly believe that we offer more than technology solutions to empower compliance leaders. Here at PerformLine, we are committed to creating solutions that help compliance leaders protect consumers. Learn how we can help your company ensure fairness, protect consumers, and thrive while remaining compliant-our team of experts are ready to help!