During the housing boom of the early 2000s, Massachusetts homeowners Ana and Ismael Ramirez did what a lot of homeowners did: They used a broker to refinance their home.
The mortgage company set prices looking at objective measures like credit history and outstanding debt. But the mortgage company also empowered the broker who sold the mortgage to jack up the Ramirezes’ mortgage rate even more and pocket some of the difference. The Ramirezes suspected they had been duped, and they weren’t the only ones. They sued, arguing that this policy violated the Fair Housing Act because it resulted in borrowers of color being charged more than white borrowers with similar credit profiles. Years later, the company settled the case, providing millions to the Ramirez family and other borrowers the mortgage company had discriminated against.
Like most companies that violate the FHA, the Ramirezes’ mortgage company did not have an explicit policy of discriminating against borrowers of color. There weren’t two separate pricing sheets — one for white homeowners and one for everyone else. But the policy of allowing brokers to raise interest rates above the level warranted by its own formula based on objective data had resulted in borrowers of color paying more than white borrowers.
Our federal government’s history of housing discrimination is an ugly scar on this country. For decades until the 1960s, racist redlining blocked black and brown families from buying homes and building wealth. Then in the years before the 2008 financial crisis, government regulators sat on their hands as predatory financial institutions targeted minority communities with the worst toxic mortgages.
Now, President Trump and Housing and Urban Development Secretary Ben Carson are trying to make it almost impossible for people like the Ramirezes to fight back. HUD has proposed dangerous new rules to gut these “disparate impact” claims — that is, housing discrimination claims that arise from policies that appear neutral, but still have the effect of disproportionately hurting people based on their race, color, religion, national origin, sex, disability, or familial status.
Disparate impact cases are already hard to prove because the companies that discriminate hold most of the evidence. HUD’s proposed rule would effectively make these claims impossible to prove by requiring those who bring discrimination claims to have all the evidence of discrimination before filing suit. In other words, even before they got to see the mortgage company’s files, the Ramirezes would have needed to provide specific details about how the company’s policy discriminated against them from the outset of the case.
And it gets worse. Any business practice that is profitable for a financial institution, insurance company, or housing provider gets immunity under HUD’s proposed rule. This means that the company could point to the extra revenue it received because its brokers fleeced borrowers of color with lousy mortgages as a justification for that discrimination.
HUD’s rule also protects companies that use computer models or algorithms to make decisions from liability under the FHA — ignoring the evidence that algorithms can be just as discriminatory as people’s actions. These changes, if implemented, would open the floodgates for giant companies to discriminate — at a time when overwhelming evidence demonstrates that housing discrimination is still alive and well.
A report last year found that in 85 metropolitan areas across the nation, prospective homeowners of color were denied mortgages at higher rates than white prospective homeowners with similar credit profiles.
Landlords and real estate agents show fewer units to black, Latinx, and Asian-American homeseekers compared to similarly situated white families. And the black homeownership rate today is nearly the same as it was when housing discrimination was legal.
The actions by Trump and Carson are shameful, but they are not a done deal. HUD is still taking comments from the public on the proposal until Friday. We should all be in this fight — because this isn’t just about housing, it’s about the kind of America we want to live in.
Do we want to live in an America defined by a racial wealth gap and the moral stain of racism, or an America where we own up to our past and start building a more equitable future for everyone?
Do we want to live in an America where big financial institutions, insurance companies, and housing providers have free rein to prey on our neighbors, or an America where every family has the legal tools available to fight back against discrimination?
Do we want an America where families are denied homes and opportunities because of who they are or who they love, or do we want to live in an America where every family has equal access to an American dream?
I know which America I want to live in: a place where everyone has the opportunity for a safe, decent, and affordable place to live. And I’ll keep fighting to make that a reality.
Elizabeth Warren is a US senator from Massachusetts and a Democratic candidate for president of the United States.