Fair housing organizations filed a lawsuit Wednesday in Washington, D.C., challenging a rule change by the Consumer Financial Protection Bureau (CFPB) to the Equal Credit Opportunity Act.
Key Details of the Challenge
- The Core Issue: The rule change eliminates the requirement for lenders to consider "disparate impact," which refers to policies that appear neutral but disproportionately harm certain groups.
- The Plaintiffs' Argument: The change makes it easier for lenders to market loans to predominantly white neighborhoods, potentially forcing minority communities to rely on high-cost lenders.
- Legal Grounds: The lawsuit claims the rule is arbitrary, capricious, exceeds statutory authority, and was issued improperly.
Statements from Plaintiffs
"This rule is the deliberate dismantling of 50 years of legal jurisprudence, regulatory guidance, and bipartisan consensus that lending discrimination has no place in America." — Lisa Rice, CEO of the National Fair Housing Alliance
"The CFPB ignored public comments, common sense, and decades of precedent." — Paulina Gonzalez-Brito, CEO of Rise Economy
Background & Broader Context
The CFPB did not respond to a request for comment. According to the National Fair Housing Alliance, the lawsuit is part of a broader campaign by the Trump administration to dismantle fair housing protections, citing proposed budget cuts and staffing reductions at HUD's Office of Fair Housing and Equal Opportunity.
Previous Settlements for Similar Violations
- 2023: The Justice Department settled with City National Bank for $31 million over alleged redlining.
- 2016: BancorpSouth paid $10.6 million for alleged discrimination.
The Plaintiffs' Request
The plaintiffs ask the court to vacate the rule.