Housing Discrimination: What Is It and What Can You Do About It?

Discrimination against home renters and buyers by landlords, sellers, and lenders on account of race, color, religion, and nationality was outlawed in the United States by the Fair Housing Act of 1968. Yet bias remains stubbornly difficult to prove and to eradicate, housing experts and civil rights attorneys say.

In 1974, the federal government expanded the Fair Housing Act to include protections for gender, and in 1988, to protect families with children and people with disabilities. Various state and local jurisdictions have added specific protections for sexual orientation and other categories. In New York, for instance, a bank or landlord can’t inquire about a person’s criminal record, says Damon P. Howard, a real-estate attorney in New York City who handles residential and commercial litigation. New York City also prohibits discrimination on the basis of immigration status or lawful occupation, Howard notes. Prohibitions on racial discrimination have been extended to include wearing of ethnic hairstyles, such as dreadlocks, as well as other attributes.

But even if it’s illegal, racial segregation remains the norm in many communities, despite progress from the Civil Rights Act era.

“The laws are well suited to protect people; the insidious problem is those things that are not instantly recognizable,” Howard says.

In early September 2020, however, the U.S. Department of Housing and Urban Development issued final rule changes proposed last year that civil and housing rights advocates say will make it even more difficult for individuals to sue for housing discrimination citing “disparate impact,” that is, a practice that on the surface seems neutral but which adversely affects members of a protected group. At the same time, HUD also terminated the Obama Administration’s 2015 Affirmatively Furthering Fair Housing regulation, which was intended to increase fair housing protections in communities.

Housing Discrimination Persists

While the laws of the land now prohibit housing bias, the fact is that, for renters and buyers, housing discrimination—especially racial discrimination—remains a serious problem in many places in the U.S. It’s true that home sellers and landlords can no longer place ads that say “whites only” or enforce restrictive covenants forbidding sale to racial or religious minorities (the U.S. Supreme Court outlawed this in the landmark 1948 Shelley vs. Kraemer decision ). Banks cannot overtly deny borrowers a mortgage solely because of their race—as was once common in the U.S. and, in fact, was perpetuated by federal housing policy through redlining.

But sellers, landlords, and bankers often discriminate in more subtle ways. These include refusing to show applicants listings in a specific neighborhood or steering minority applicants to communities where they are already prevalent, thereby promoting segregation.

“Housing discrimination is one of the most insidious forms of discrimination,” says New York civil rights attorney Alanna Kaufman, who represents clients in housing and employment discrimination cases. “It is particularly hard to tell if you have been discriminated [against] in housing as opposed to employment. You often don’t know who else as a buyer or renter is looking at the same apartments or homes or units.”

A three-year Newsday investigation published in 2019, for instance, found “widespread separate and unequal treatment of minority potential homebuyers and minority communities” in Long Island’s Suffolk and Nassau counties in New York—one of the nation’s most liberal states. Employing minority and white undercover homebuyers as testers, the evidence indicated that in 40% of the tests, brokers exposed minority testers to disparate treatment compared with white testers, and for Black testers, that incidence rose to nearly half. Black testers experienced disparate treatment 49% of the time, compared with 39% for Hispanic testers and 19% for Asian testers.

Discrimination in Mortgage Lending

With respect to discrimination in mortgage lending, a January 2020 study of racial and ethnic discrimination in housing from 1976 to 2016 found that in “the mortgage market, racial gaps in loan denial had declined slightly, and racial gaps in mortgage costs didn’t decline at all, suggesting persistent racial discrimination.”

Aside from outright denials, mortgage discrimination also includes making loans on less favorable terms than those for which minority applicants should qualify: An analysis of almost 7 million 30-year mortgages by researchers at the University of California, Berkeley found that Black and Latino applicants paid nearly 0.08% more in mortgage interest and paid more in refinance fees compared to white borrowers in face-to-face transactions. They fared only slightly better when using online or smartphone applications.

Anti-discrimination laws in mortgage lending are included in the Fair Housing Act and the Equal Credit Opportunity Act (ECOA), passed in 1974, and are enforced by the Consumer Financial Protection Bureau (CFPB) and state regulators.

Housing Discrimination Stunts Blacks’ Wealth Building

From a wealth-building perspective, housing discrimination has been devastating to Black Americans’ ability to build and transmit generational wealth. According to a 2019 analysis, the Urban Institute, a Washington, D.C., think tank, found that average housing wealth at age 60 or 61 for those who had purchased a home at age 45 or older was $26,668 for Blacks and $104,866 for whites.

The wealth gap is largely attributable to the fact that a smaller percentage of Blacks are able to buy first homes before the age of 35, and their first homes are of lower value and purchased with more debt and less equity than whites. In addition, Blacks often don’t maintain homeownership beyond their first home, more often reverting to renting after the first purchase. 

The median white family in the United States has 12 times the wealth of African American families, according to studies by the Economic Policy Institute, a nonpartisan, nonprofit think tank, that cite federal government data. What’s more, that gap has worsened rather than improved in the last couple of decades.

How to Fight Back Against Housing Discrimination

What can a prospective homebuyer or renter do if they believe they are being discriminated against?

Under the anti-discrimination and harassment laws, owners of private property can legally refuse to rent or sell to anyone, and for any reason, so long as there is not a discriminatory basis against a “protected class,” Howard says. This means proving discrimination has occurred is not always easy.

Attorneys say that documenting the experience by actively listening to brokers, agents, and lenders and taking notes is the best way to gather the evidence needed to make a case with state or local fair housing officials or with the U.S. Department of Housing and Urban Development (HUD), the federal agency that enforces fair housing laws. They advise looking for the following:

Red-flag language

Take note of statements or recommendations that may be a tip-off to discrimination.

“In dealing with a real estate agent, you can be attuned to the type of language the agent is using, if they say, ‘This is a really good fit,’ or ‘I don’t feel you would be at home in this neighborhood,’ or ‘I don’t feel this would be a good fit for you,’ or ‘I feel you would be happier in this neighborhood.’ If you feel the person is trying to direct you to certain neighborhoods with certain races or religions, that could often be a flag,” Kaufman says.

Unexpected roadblocks

Sudden obstacles that appear even after applicants are financially qualified for a home or apartment are another sign. “You try to rent or buy an apartment [and are denied] and then you see it is still on the market,” Kaufman says.

“What we see most commonly in race discrimination is someone being told that apartments are not available when they are. A sign outside [says] that apartments are available and you go in and they are not. That is very common,” Kaufman says.

In instances like this, it is helpful to reach out to organizations such as the Fair Housing Justice Center or similar nonprofit groups or to local human rights commissions, where testers of different races can be sent out to test for disparate treatment. “Often, as lawyers, we work with organizations that do testing with someone that is not in the same protected class and that could be really good evidence,” Kaufman says.

A homebuyer also can perform their own search to learn whether a broker failed to show all of the houses that are on the market or, in the case of mortgages, check the bank’s posted rates to confirm what rates are available, Howard says.

Negative credit information

Renters have recourse if they believe they have been discriminated against due to one of the following reasons:

• They have been denied a home because of negative or insufficient information obtained from a consumer reporting agency
• They are being charged a higher rent
• The terms of the rental are affected by adverse credit information

In these cases, federal and state fair credit laws require that the applicant be informed of the reason they were rejected or charged a higher rent; provided with the name and address of the agency that reported the negative information; and told of the applicant’s right to obtain a free copy of the report by requesting it from that credit agency within 60 days. Renters can dispute the report’s accuracy and add their own “consumer statement” to the report.

Similarly, in the case of suspected mortgage discrimination applicants also have the right to see any negative credit information and they have a right to dispute it. They can report suspected mortgage discrimination or fraud to the CFPB for alleged violations of the Equal Credit Opportunity Act, and with HUD for alleged violations of the Fair Housing Act. 

Steps to Get Help

If you feel you have been discriminated against in housing on the basis of race, sex, national origin, religion, disability, or for other reasons forbidden by law:

Get state and/or local assistance

Contact your state or local fair housing commission or fair housing center. For help finding a local fair housing center, try contacting the National Fair Housing Alliance in Washington, D.C. Fair housing centers can send out testers to find evidence of discrimination in renting and home selling and in mortgage lending.

In some states, such as New York, individuals also can file a complaint with the state Division of Human Rights or state attorney general’s civil rights bureau, or locally with a city commission on human rights. These government agencies can investigate complaints and, if there’s probable cause, they can hold hearings to determine the facts, Howard says. But the alacrity with which local agents pursue a complaint sometimes depends on the politics of the area.

You also might consider hiring a civil rights or housing attorney to advocate for you.

File a federal complaint

Fill out and file an administrative complaint with HUD’s Fair Housing Equal Opportunity Office (FHEO), which by law is supposed to investigate within 100 days of a filing. You can call the Housing Discrimination Hotline at (800) 669-9777, print out a form and mail it to the nearest regional office, or file a complaint online. The complaint form is available in English, Spanish, and seven other languages. Retaliation for filing a complaint is illegal. FHEO also enforces anti-discrimination laws with respect to mortgage lending and appraisals.

Sometimes the U.S. Department of Justice will file lawsuits against people or companies that have violated the law, especially if there has been violence or a violation of a criminal law, Howard says.

File a mortgage lending complaint

If you suspect mortgage lending discrimination, you can also file a complaint with the CFPB alleging violations of the federal Equal Credit Opportunity Act. Contact your state attorney general’s office, too, to find out about state fair housing laws and the procedure for filing complaints at the state and local level.

If a complaint is upheld in federal district court, in general, victims can get actual damages or punitive damages for willful wrongdoing, depending on the circumstances, along with court costs and legal fees. In the case of class action lawsuits with others with the same claims, the government generally tries to win a settlement agreement with the defendant, Howard says.

Why State and Local Complaints May Be More Effective

Under the current administration, the federal government has been making it somewhat more difficult to get administrative action on fair housing complaints, according to Howard.

“They are enforced at the administrative level—and you are relying on HUD at the federal level to enforce them,” he says. “Recently, we have seen some proposed rules that make it harder to bring these complaints and for people of color and other protected classes to prevail in their claims of discrimination, which is the opposite of where we are trying to go.

In 2019, “HUD was trying to propose a change to the standard applied under the Fair Housing Act, from a disproportionate adverse impact to a harder standard for claimants to meet,” Howard continues. Under a doctrine known as disparate impact, a policy can be considered discriminatory if it has a disproportionately adverse impact on groups protected under the law when no legitimate, nondiscriminatory business need for the policy exists.

“The ‘disparate impact’ standard recognizes that it can be an insurmountable hurdle to prove that discrimination was intentional. The new rule would allow businesses to continue policies that have a demonstrably discriminatory effect if the claimant cannot establish that the policy was the direct cause of the discriminatory effect,” Howard says. This change in the standard for proving discrimination went into effect on September 4, 2020.

For that reason, Howard suggests, in states and cities with tough fair housing standards and agencies, it may be preferable to pursue legal action through state and local agencies and courts rather than through HUD and federal courts. Local housing and civil rights attorneys and fair housing groups should know how best to proceed.

“Pay attention, ask questions, take notes, investigate, and seek legal counsel. That is always the best advice,” Kaufman says.