[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
PROTECTING THE AMERICAN DREAM (PART I):
A LOOK AT THE FAIR HOUSING ACT
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON THE CONSTITUTION,
CIVIL RIGHTS, AND CIVIL LIBERTIES
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
MARCH 11, 2010
__________
Serial No. 111-80
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://judiciary.house.gov
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COMMITTEE ON THE JUDICIARY
JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California LAMAR SMITH, Texas
RICK BOUCHER, Virginia F. JAMES SENSENBRENNER, Jr.,
JERROLD NADLER, New York Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina ELTON GALLEGLY, California
ZOE LOFGREN, California BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas DANIEL E. LUNGREN, California
MAXINE WATERS, California DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts J. RANDY FORBES, Virginia
STEVE COHEN, Tennessee STEVE KING, Iowa
HENRY C. ``HANK'' JOHNSON, Jr., TRENT FRANKS, Arizona
Georgia LOUIE GOHMERT, Texas
PEDRO PIERLUISI, Puerto Rico JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois TED POE, Texas
JUDY CHU, California JASON CHAFFETZ, Utah
LUIS V. GUTIERREZ, Illinois TOM ROONEY, Florida
TAMMY BALDWIN, Wisconsin GREGG HARPER, Mississippi
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DEBBIE WASSERMAN SCHULTZ, Florida
DANIEL MAFFEI, New York
[Vacant]
Perry Apelbaum, Majority Staff Director and Chief Counsel
Sean McLaughlin, Minority Chief of Staff and General Counsel
------
Subcommittee on the Constitution, Civil Rights, and Civil Liberties
JERROLD NADLER, New York, Chairman
MELVIN L. WATT, North Carolina F. JAMES SENSENBRENNER, Jr.,
ROBERT C. ``BOBBY'' SCOTT, Virginia Wisconsin
WILLIAM D. DELAHUNT, Massachusetts TOM ROONEY, Florida
HENRY C. ``HANK'' JOHNSON, Jr., STEVE KING, Iowa
Georgia TRENT FRANKS, Arizona
TAMMY BALDWIN, Wisconsin LOUIE GOHMERT, Texas
JOHN CONYERS, Jr., Michigan JIM JORDAN, Ohio
STEVE COHEN, Tennessee
SHEILA JACKSON LEE, Texas
JUDY CHU, California
David Lachmann, Chief of Staff
Paul B. Taylor, Minority Counsel
C O N T E N T S
----------
MARCH 11, 2010
Page
OPENING STATEMENTS
The Honorable Jerrold Nadler, a Representative in Congress from
the State of New York, and Chairman, Subcommittee on the
Constitution, Civil Rights, and Civil Liberties................ 1
WITNESSES
Ms. Shanna L. Smith, President and CEO, National Fair Housing
Alliance
Oral Testimony................................................. 3
Prepared Statement............................................. 6
Ms. Barbara Arnwine, Executive Director, Lawyers' Committee for
Civil Rights Under Law
Oral Testimony................................................. 19
Prepared Statement............................................. 22
Mr. Kenneth Marcus, Lillie and Nathan Ackerman Visiting
Professor, Baruch College School of Public Affairs, City
University of New York
Oral Testimony................................................. 35
Prepared Statement............................................. 37
Mr. John P. Relman, Founder and Director, Relman and Dane
Oral Testimony................................................. 74
Prepared Statement............................................. 79
Ms. Rea Carey, Executive Director, National Gay and Lesbian Task
Force Action Fund
Oral Testimony................................................. 88
Prepared Statement............................................. 91
Ms. Okianer Christian Dark, Associate Dean for Academic Affairs
and Professor of Law, Howard University School of Law
Oral Testimony................................................. 99
Prepared Statement............................................. 103
APPENDIX
Material Submitted for the Hearing Record........................ 123
OFFICIAL HEARING RECORD
Material Submitted for the Hearing Record but not Reprinted
December 2008 report entitled ``The Future of Fair Housing: Report of
the National Commission on Fair Housing and Equal Opportunity.''
http://www.nationalfairhousing.org/portals/33/reports/
future_of_fair_housing.pdf
January 2007 report by Michigan's Fair Housing Centers entitled
``Sexual Orientation and Housing Discrimination in Michigan.''
http://www.fhcmichigan.org/images/Arcus_web1.pdf
May 1, 2009 report by the National Fair Housing Alliance entitled
``Fair Housing Enforcement: Time for a Change.''
http://www.nationalfairhousing.org/
LinkClick.aspx?fileticket=dsT4nlHikhQ%3D&tabid=
3917&mid=5321
PROTECTING THE
AMERICAN DREAM (PART I):
A LOOK AT THE FAIR HOUSING ACT
----------
THURSDAY, MARCH 11, 2010
House of Representatives,
Subcommittee on the Constitution,
Civil Rights, and Civil Liberties,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to notice, at 1:58 p.m., in
room 2141, Rayburn House Office Building, the Honorable Jerrold
Nadler (Chairman of the Subcommittee) presiding.
Present: Representatives Nadler, Cohen, and Chu.
Staff present: (Minority) David Lachmann, Subcommittee
Chief of Staff; Kanya Bennett, Counsel; and (Minority) Paul
Taylor, Counsel.
Mr. Nadler. This hearing of the Subcommittee on the
Constitution, Civil Rights, and Civil Liberties will come to
order now that a convening quorum is present.
I will recognize myself for an opening statement first.
Today, the Subcommittee on the Constitution, Civil Rights,
and Civil Liberties begins a review of housing discrimination,
the Fair Housing Act, and the effectiveness of our government's
enforcement of the law.
Housing discrimination remains a persistent problem in our
country. While we would like to think that housing
discrimination is an artifact of the past, we know it is not.
Jim Crow laws and restrictive covenants may no longer be with
us, but the discriminatory attitudes and practices they
represented remain with us.
Outright discrimination, steering, a refusal to build
accessible housing as required by law, and discriminatory
lending practices continue to plague renters and prospective
homeowners. Additionally, there are still people who are
subjected to legally sanctioned discrimination in many
jurisdictions. Discrimination on the basis of sexual
orientation and gender identity are perfectly legal in many
areas, and people are regularly denied a place to live simply
because of that status.
Today, earlier today, I have introduced along with Chairman
Conyers legislation amending the Fair Housing Act to correct
that omission. Many communities around the Nation have already
done so, and the time is long since passed when the Nation
should follow suit.
As the Subcommittee continues its work, we will be looking
at other ways to amend our fair housing laws and to devise
other strategies to ensure that we can most effectively
eliminate housing discrimination once and for all. We are
fortunate today to have a distinguished panel of witnesses who
will provide an excellent update on where we stand and
recommend further actions to fulfill the promise of the Fair
Housing Act.
Fair housing has always been a value that has defied
partisanship. I look forward to work with my colleagues on both
sides of the aisle to further the American values of equality
and fairness.
In the interest of proceeding--well, I don't have to do
that. Without objection, all Members will have 5 legislative
days to submit opening statements for inclusion in the record.
Without objection, the Chair will be authorized to declare a
recess of the hearing if necessary.
Yes, I should mention that one reason a number of the
Members of the Committee or the Subcommittee are not here today
is that the Congressional Black Caucus is having a meeting at
the White House right now, and that has deprived us of some of
our interested Members for the moment.
We will now turn to our witnesses. As we ask questions of
our witnesses, the Chair will recognize--well, I will dispense
with that. [Laughter.]
I was going to say we will recognize Members in the order
of seniority, et cetera. I will now introduce the witnesses.
Shanna Smith is president and CEO of the National Fair
Housing Alliance. Ms. Smith began her career in 1975 as
executive director of the Toledo Fair Housing Center, where she
pioneered investigations and litigation in fair housing
practices. Ms. Smith also serves on the executive committee of
the Leadership Conference on Civil Rights, where she co-chairs
its fair housing task force, is a member of the board of the
Center for Responsible Lending, and was appointed in January
2008 to the Federal Reserve's Community Advisory Council.
Barbara Arnwine has been the executive director of the
Lawyers' Committee for Civil Rights Under Law since 1989. While
there, she has played an instrumental role in advocating for
the passage of civil rights legislation, including the Civil
Rights Act of 1991.
She has spent her career advocating on behalf of civil
rights in the areas of housing, fair lending, community
development, employment, voting, education and environmental
justice. Ms. Arnwine is a graduate of Scripps College and
earned her law degree from Duke University.
Kenneth Marcus holds the Lillie and Nathan Ackerman chair
in equality and justice in America at the Baruch School of
Public Affairs City University of New York, where he teaches
public administration, education law, and civil rights.
Before joining the faculty at Baruch, Mr. Marcus served as
a staff director of the United States Commission on Civil
Rights and as the general deputy assistant secretary of housing
and urban development for fair housing and equal opportunity.
Mr. Marcus is a graduate of Williams College magna cum laude
and the University of California, Berkeley, School of Law.
John Relman is the founder and director of the firm Relman
and Dane. Mr. Relman has practiced extensively in the areas of
fair housing and fair lending law. Before going into private
practice, Mr. Relman served as project director of the Fair
Housing Project at the Washington Lawyers' Committee for Civil
Rights and Urban Affairs.
Prior to joining the committee, he clerked for the
Honorable Sam Ervin III of the U.S. Court of Appeals for the
Fourth Circuit and the Honorable Joyce Hens Green of the U.S.
district court for the District of Columbia. Mr. Relman is a
graduate of Harvard University and received his law degree from
the University of Michigan.
Rea Carey is the executive director of the National Gay and
Lesbian Task Force Action Fund based in Washington, D.C., which
advocates on behalf of the gay, lesbian, bisexual and
transgender community. She has over 20 years of experience in
nonprofit management and in public policy issues affecting the
LGBT community. Ms. Carey earned her master's degree in public
administration from Harvard University's Kennedy School of
Government.
Okianer Christian Dark is associate dean of academic
affairs and professor of law at Howard University. Prior to
joining Howard's faculty in the fall of 2001, Ms. Dark served
as an assistant United States attorney in the civil division of
the U.S. attorney's office in Portland, Oregon. There, Ms. Dark
was responsible for the civil rights litigation in the district
of Oregon, which included the Fair Housing and Americans with
Disabilities Act.
She has also offered her personal story as a victim of
housing discrimination in a videotape titled ``Who Can Ever Get
Used to This?'', which has been used nationally for training
purposes by fair housing organizations, law school property and
fair housing courses, and by the United States Department of
Justice. Ms. Dark received her B.A. magna cum laude from Upsala
College and her law degree from Rutgers University.
I am pleased to welcome all of you. Your written statements
in their entirety will be made part of the record.
I would ask each of you to summarize your testimony in 5
minutes or less. To help you stay within that time, there is a
timing light at the table. When 1 minute remains, the light
will switched from green to yellow and then red when the 5
minutes are up.
Before we start, let me apologize for beginning the hearing
a little late. Most of that was due, as you know, to the fact
that we were voting on the floor.
Before we begin, it is customary for the Committee to swear
in its witnesses.
[Witnesses sworn.]
Mr. Nadler. Thank you. Let the record reflect that the
witnesses answered in the affirmative. You may be seated.
Our first witness will be Ms. Smith, who is recognized for
5 minutes.
TESTIMONY OF SHANNA L. SMITH, PRESIDENT AND CEO, NATIONAL FAIR
HOUSING ALLIANCE
Ms. Smith. Thank you. Good afternoon, and thank you,
Chairman Nadler, for the opportunity to talk about the American
dream and fair housing.
As you know, the Fair Housing Act was passed in 1968 and
amended in 1988 with very strong bipartisan support. Congress's
intent was to create neighborhoods where people would have
equal access to the American dream and an opportunity to live
where they wanted to by choice and free of discrimination.
For myriad reasons, we as a Nation have truly failed to
come close to achieving the goals of the Fair Housing Act.
So the 1968 law clearly articulated two goals of the Fair
Housing Act. And in 1972, the U.S. Supreme Court, in
Trafficante v. Metropolitan Life Insurance Company and
Parkmerced Apartments in San Francisco talked about those two
goals.
One is obvious. It is the elimination of housing
discrimination. But the second goal is to promote residential
integration.
Our failure as a Nation to effectively address both
individual and systemic housing, lending and insurance
discrimination means discrimination is still pervasive and
residential segregation remains the norm. It is important to
point this out, because when you look at the companion law,
Title VII, the Equal Opportunity Employment Act, we see many
corporations who have succeeded in having a diverse workforce.
But each night, that workforce goes home to segregated
communities, segregated neighborhoods.
The Fair Housing Act is one of the strongest civil rights
laws that has ever been passed. One of the main reasons we do
not have more integrated communities today is because the law
has not been effectively enforced. We need to use the strength
of the existing law to promote integration and fight housing
discrimination.
So how prevalent is discrimination? Last year, HUD, the
U.S. Department of Justice, the private fair housing groups,
and the State and local agencies only reported about 30,000
complaints of discrimination. We have looked at research to
show that we could estimate that more than 4 million instances
of housing discrimination happened annually.
Who is being harmed by this? Well, we have the seven
protected classes, but in addition, we need to talk about how
people with disabilities and families with children right now
are reporting the highest rates of discrimination.
We recently settled a lawsuit with the fifth largest
builder in the United States, the AG Spanos company. And I have
to say that Michael Spanos and the company was very good to
work with. He was concerned that the discrimination happened.
But the fact is, from 1991 through 2007 and 2008, they
built apartment complexes, 123 apartment complexes, that were
not accessible to people with disabilities. And in that
settlement, you know, he has got to renovate and retrofit
12,300 apartments at a cost of nearly $8 million to $10
million. And had they been built correctly, people with
disabilities would have had access to those units and this
latter cost wouldn't have come to play.
Families with children are experiencing rampant rates of
discrimination. When you consider that 2 million children are
homeless now because of the foreclosure crisis and families
with children are looking for housing every day, they look on
the Internet and they see ads that say, ``No kids,'' ``no
teenagers,'' ``three-bedroom apartment, one child,'' ``three-
bedroom single-family home for rent, four people only.''
And the law says you can--in a three bedroom with a
family--you can have a husband and wife and four kids, and yet
they are restricting occupancy.
Then we have the whole issue of underreported complaints of
housing discrimination. Sexual harassment in housing continues
to increase. I personally think with the advent of Viagra that
we have seen much more sexual harassment of particularly low-
income women in housing.
And a recent case in New York City in the----
Mr. Nadler. Excuse me. Let me just explore that for a
second. Sexual harassment in housing. What is the connection
with the housing?
Ms. Smith. The landlords will require or----
Mr. Nadler. Oh, sexual harassment by landlords.
Ms. Smith. Yes, I am sorry.
Mr. Nadler. Okay.
Ms. Smith. Sexual harassment by the landlords. The New York
City case on the Upper West Side that just happened this
month--I am sorry, in February--women were being evicted
because they refused to have sex with the landlord and the
superintendent. The superintendent was a convicted child sex
offender, and the women had no idea that they had any
protection under the fair housing law, that landlords cannot
sexually harass a tenant.
Other underreported issues deal with national origin.
Latinos and Asian-Americans are not filing cases although our
investigations when we do testing show high rates of
discrimination that they experience.
Oh, it said stop.
Also, the other thing I wanted to talk about very quickly
is disparate impact. All 11 circuits have heard fair housing
cases, and they have all said that the Fair Housing Act covers
both intentional discrimination and discrimination by housing
policies and practices that have a disparate impact.
And while the Supreme Court hasn't made a decision, all 11
circuits have. And in my testimony, I have several examples.
And finally, quick recommendations. The National Fair
Housing Alliance since 1990 has supported adding additional
protected classes: source of income, source of--I would say
source of legal income, marital status, sexual orientation, and
gender identity or expression.
We worked with former Secretaries Jack Kemp and Henry
Cisneros and had a commission on fair housing. And the top
recommendation was to create an independent fair housing agency
for enforcement of the law.
And finally, on the discriminatory advertising I talked
about, the Communications Decency Act protects these Internet
providers and servicers and allows them to run ads or have
people post ads that say no kids, no Blacks, Christians only.
So what we would like to see is an amendment to the
Communications Decency Act so that it does--it no longer trumps
the Fair Housing Act.
Thank you.
[The prepared statement of Ms. Smith follows:]
Prepared Statement of Shanna L. Smith
__________
Mr. Nadler. Thank you.
Ms. Arnwine is recognized for 5 minutes.
TESTIMONY OF BARBARA ARNWINE, EXECUTIVE DIRECTOR, LAWYERS'
COMMITTEE FOR CIVIL RIGHTS UNDER LAW
Ms. Arnwine. Good afternoon, Chairman Nadler.
My name is Barbara Arnwine, and I am the executive director
of the Lawyers' Committee for Civil Rights Under the Law. Thank
you for this opportunity to testify at this important hearing
on the Fair Housing Act.
Forty-two years after passage of the Fair Housing Act as
amended in 1988, we are still so far from fulfilling its
promise. Its requirement that communities receiving Federal
housing assistance and the Federal Government proactively
further fair housing, residential integration, and equal
opportunity needs better governmental enforcement and continued
due diligence by civil rights organizations like the Lawyers
Committee, NFHA, and all the ones that are represented here.
This need was reiterated during hearings held as part of
the National Commission on Fair Housing and Equal Opportunity.
The commission's recommendations were released in a major
report in December 2008 entitled the ``Future of Fair
Housing,'' and we urge this Congress to affirmatively act upon
them as soon as possible.
I will address some of these today, and I am sure my
esteemed panel member Dean Okianer Dark, who was a member of
this commission, will also provide more details.
As a multifaceted civil rights organization, the Lawyers'
Committee works across many disciplines to address civil rights
issues and their impact upon minority communities. Our
environmental justice, community development, and education
projects are all especially interconnected with the work of the
Fair Housing Project in a coordinated effort to combat
discriminatory practices and resegregation.
To this end, we are recommending diversity and education
and integration requirements, and the reauthorization of the
elementary and secondary education act programs to redress the
Federal Government's role in perpetuating segregated
communities in the education context and the housing context.
Presently, the Lawyers' Committee's top fair housing
priority is fighting the foreclosure crisis. As stated in the
``Future of Fair Housing'' report, ``The impact of this crisis
is causing one of the greatest losses of wealth in the American
minority community in its history.'' Millions of distressed
homeowners have become vulnerable targets to unscrupulous and
sometimes criminal third-party scammers posing as loan
modification specialists.
The Lawyers' Committee has responded by creating a
coordinated national campaign entitled the loan modification
scam prevention network to support existing efforts at the
national, State and local levels. We are working with Fannie
Mae, Freddie Mac, NFHA, and NeighborWorks of America. The
Lawyers' Committee is leading an effort to increase reporting
and prosecution of alleged scammers to support ongoing
enforcement efforts.
Our Web site, www.preventloanscams.org, provides additional
information about our campaign.
For a legislative fix, we are supporting the formation of
the Consumer Financial Protection Agency, which the House has
already passed, and is now awaiting passage in the Senate. We
believe this new agency will help quell discriminatory,
deceptive and fraudulent loans which have led to this current
foreclosure crisis.
As part of our litigation efforts after Hurricane Katrina,
the Lawyers' Committee created the Disaster Survivor Legal
Assistance Initiative and emerged as one of the leading civil
rights organizations in providing legal assistance to victims
of the storm. This brought a number of cases to light.
First, alleged violations by Internet providers of the Fair
Housing Act arose as a major issue. And as Shanna has already
said, before the courts have thus far shielded Internet
providers under the Communications Decency Act, we ask that
Congress adopt a simple amendment to the CDA which makes clear
that nothing in the CDA limits the application of the Fair
Housing Act or any similar State law.
Second, for several years, the Lawyers' Committee's fair
housing program has given priority to fighting discriminatory
zoning decisions in municipalities. This has been a major
barrier in our post-Katrina housing recovery efforts in
Mississippi and New Orleans. A case we are involved in with
John Relman and others in St. Bernard's Parish illustrates how
HUD's enforcement of Section 808 of the Fair Housing Act can be
extremely effective in fighting discriminatory and exclusionary
zoning.
Despite HUD's actions, we still believe it is necessary for
HUD, one, to release a guidance as soon as possible so that
recipients of Federal housing know their duties, and it is
critical for Congress to amend the Fair Housing Act so that a
discriminatory housing practice involves a violation of the
affirmatively furthering provision under Section 3608.
Third, the Lawyers' Committee has focused much of its
amicus litigation on source of income discrimination. And while
we are encouraged by the court's decisions thus far, we urge
congressional action here, as well.
Discrimination based on source of income is currently not
covered under the Fair Housing Act. Hence, to better ensure
compliance and clarify the act's original intent, we recommend
an amendment to the Fair Housing Act that would add source of
income as a protected class.
And lastly, all courts of appeal have recognized that
violations of the Fair Housing Act may be proved on a disparate
impact standard. However, the standard is now under attack by
the financial industry in a series of fair lending cases, and
it is very important that the standard be vigorously defended
by the Department of Justice and by the adoption by HUD of a
regulation consistent with the holdings in all of these courts
of appeals.
The Lawyers' Committee applauds this Subcommittee's actions
to take a close look at the Fair Housing Act. It is
increasingly clear that fair housing is the lynchpin to
protecting the American dream. We look forward to the further
hearings addressing these issues and determining what actions
are most important and will be most successful.
Thank you so much.
[The prepared statement of Ms. Arnwine follows:]
Prepared Statement of Barbara Arnwine
__________
Mr. Nadler. Thank you.
Mr. Marcus is recognized for 5 minutes.
TESTIMONY OF KENNETH MARCUS, LILLIE AND NATHAN ACKERMAN
VISITING PROFESSOR, BARUCH COLLEGE SCHOOL OF PUBLIC AFFAIRS,
CITY UNIVERSITY OF NEW YORK
Mr. Marcus. Thank you, Mr. Chairman. It is always an honor
to----
Mr. Nadler. Speak directly into the mic, please.
Mr. Marcus. Better?
I commend the Subcommittee for entertaining the topic
today. As Ms. Arnwine pointed out, we have not yet fulfilled
the mission behind the Fair Housing Act. We continue to see
serious, significant discrimination of many kinds throughout
this country in housing and in lending, particularly glad that
Ms. Smith pointed out a case of sexual harassment, which we do
see in apartments around the country, and I think that that
example is particularly useful because it is one example that
shows that as bad as discrimination is in other areas--
employment, education, labor, so on and so forth--when it
happens in your home, when it happens in your home, there is a
kind of a violation that goes beyond what one sees elsewhere.
And we do see today forms of discrimination like sexual
harassment, like outright racism in housing that really need to
be addressed. My successor at the Office of Fair Housing and
Equal Opportunity, John Trasvina, tells a story of a gentleman
just last year, of a case in which a landlord saw his tenant
speaking to an African-American couple and said, ``If you all
want to have African-Americans to visit, we are going to have
to ask you to move. We are not having those people at our
property. We own the property. That has never happened. And we
are not going to let it start happening with this.''
So one sees that sort of blatant outright discrimination.
And that is something that we need to address and address
firmly and for which we need a very strong civil rights
apparatus to address.
However, I think the reason that we have heard already from
two witnesses a discussion of disparate impact is that nowadays
most people who harbor prejudice of this sort will not admit it
quite so openly. They will conceal it. They will deny it. In
some cases, they are even unconscious of it.
For that reason, we have disparate impact as a means of
discerning discrimination where intent cannot be proven. But
disparate impact has been controversial, because while it can
be useful as a legitimate law enforcement tool, it can also be
misused. And when it is misused, there are real dangers--both
legally and in terms of equity--and I want to say a few words--
and I want to say a few words about that.
You have heard from two witnesses correctly that the courts
of appeals have found that disparate impact is a viable claim
under the Fair Housing Act. And I think that that argument
would prevail in any court in the country, with the possible
exception of the Supreme Court.
We do not know what the Supreme Court would say if
disparate impact is challenged, as it has been challenged
before when the issue has been averted. And there are a lot of
arguments that can go either way on this issue.
We know, for instance, that when President Reagan signed
the amendment to the Fair Housing Act, he said that the bill
``does not represent any congressional or executive branch
endorsement of the notion expressed in some judicial opinions
that Title VIII violations may be established by a showing of
disparate impact,'' et cetera. In fact, he said more explicitly
Title VIII speaks only to intentional discrimination.
So I would say that the question remains unsettled in the
sense that we still don't know what the Supreme Court would do
and that, if Congress has a view on this, it can resolve it--it
can resolve it with legislation.
More importantly, perhaps, if it does address that, there
is the question as to whether certain forms of disparate impact
are inconsistent with equal protection, an issue that was
raised both in the Kennedy opinion and in the Scalia opinion in
the recent New Haven firefighters case, Ricci v. DeStefano.
In that case, the question was raised as to whether
disparate impact may violate equal protection to the extent
that, for instance, it presses either employers or other
entities to use race-conscious remedies for permits other than
to combat discrimination.
Now, I see I need to sum up, so what I am going to say is,
the reason that I am raising this is that there remains a real
question as to whether in a subsequent case the Supreme Court
would either narrow in an unpredictable way or entirely strike
down the use of disparate impact under Title VIII.
If Congress wants to avoid that, it needs to address
disparate impact in this legislation in a way that will
preserve it from judicial challenge.
Mr. Nadler. Let me just ask you a question at this point.
Mr. Marcus. Yes, sir.
Mr. Nadler. Do you believe a challenge in front of the
Supreme Court on disparate impact would be statutory or
constitutional in nature?
Mr. Marcus. Well, I think it could go either way. I think
that Justice Scalia is predicting that the constitutional
challenge is upcoming, and I think it will happen.
As for the statutory challenge, since there is no circuit
split, I don't see it imminently, but we know that the Supreme
Court got two cases in which it could have been resolved.
So I think both challenges may come up, but the
constitutional challenge may be more imminent.
Mr. Nadler. Thank you.
Mr. Marcus. Thank you.
[The prepared statement of Mr. Marcus follows:]
Prepared Statement of Kenneth Marcus
__________
Mr. Nadler. I now recognize Mr. Relman for 5 minutes.
TESTIMONY OF JOHN P. RELMAN, FOUNDER AND DIRECTOR, RELMAN AND
DANE
Mr. Relman. Thank you, Chairman Nadler. And thanks----
Mr. Nadler. Microphone, please.
Mr. Relman. Yes, good.
Thank you, Chairman Nadler, and thank you very much both
for convening these hearings and for the opportunity to
testify.
My testimony today will address two topics: discrimination
housing practices directed toward the disability community and
the role of private firms in recent large fair housing
enforcement actions.
The Fair Housing Act has prohibited disability
discrimination for 22 years, yet hundreds of thousands of
people with disabilities remain stranded in institutional or
inaccessible settings because of architectural and attitudinal
barriers.
Just as the Fair Housing Act was a powerful force for
racial integration in America, it was also intended to promote
the integration of people with disabilities. For people with
disabilities, integration means being part of the American
mainstream and not being treated unfavorably because of a
housing provider's biases or stereotypes about disability.
Vigorous enforcement of the Fair Housing Act and timely
enforcement of the Fair Housing Act is particularly important
when it comes to refusals to accommodate inaccessible design
and construction. It can be the difference between a person
with a disability being allowed to or being able to live in an
integrated setting or being relegated to an institutional
setting.
Twenty-two years after the amendment, the governmental
enforcement of the Fair Housing Act's disability provisions
still does not begin to approach the level of a national
commitment. The Obama administration inherited a bureaucratic
environment from past Administrations that has left a backlog
of complaints languishing on the desks of investigators, some
of whom don't fully understand the basic elements of the
disability discrimination claim, and that has left people
languishing unnecessarily in institutional settings.
Under the leadership of Assistant Attorney General Tom
Perez and HUD Secretary Shaun Donovan, the Obama administration
is taking what I believe are important steps to improve
enforcement of the Fair Housing Act's disability protections.
But because discrimination against people with disability
remains rampant, more fair housing complaints allege disability
discrimination than any other protected class.
And for this reason, the Administration needs private civil
rights firms as enforcement partners. I would direct the
Committee's attention to both the statistics in Shanna Smith's
testimony showing the number of disability complaints filed and
also her reference to the Spanos case. That was a case that we
litigated on behalf of the National Fair Housing Alliance.
And although we only have 14 lawyers in our national civil
rights practice, yet we were able to prosecute successfully
this very complicated and cutting-edge case, I think an example
of ways that private firms can assist with the need to fill the
gap where the Federal Government has not been able to fill in.
Beyond problems with design and construction, people with
disabilities also face a rash of other problems that includes
differential treatment, facially neutral rules that have a
harsher disparate impact on them, refusal to provide reasonable
accommodations in rules and policies, or to permit reasonable
modifications of units that give access to common areas and
increase accessibility.
And we have also seen problems in retirement homes, where
housing providers impose rules and policies that discriminate
on the basis of disability.
As well, there appears to be a widespread use of
advertisements for active adults and those capable of living
independently without assistance. These are discriminatory
advertisements. Policies such as these and practices discourage
people with disabilities from applying and living in
communities with people who do not have disabilities.
In many of these situations, the Fair Housing Act already
provides sufficient substantive protections. And the principal
question is really one of enforcement. There are, however, a
number of areas in which we believe--I believe the Fair Housing
Act or the HUD regulations that govern enforcement can be
clarified and strengthened.
I would like to mention three. The first concerns the
statute of limitations when it comes to design and construction
barriers. The court of appeals for the Ninth Circuit has
recently adopted a very cramped view of the Fair Housing Act's
statute of limitations that bars litigation of design and
construction violations that are identified more than 2 years
after the date of the final occupancy permits.
What this does is it effectively gives designers and
developers a free bite at the apple. It lets them off the hook
for blatant violations that are going to be in place for many
years to come, and it prevents access as long as they can avoid
detection in the first 2 years of operation.
The second issue that we think can be clarified is to
provide a private right of conduct that allows individuals and
private parties to challenge discriminatory municipal
ordinances that prevent people in recovery from drug and
alcohol addiction, for example, from being able to live in
single-family-zoned areas in neighborhoods and allowing their
full integration into these communities. And that is--that is a
provision that should be allowed under Section----
Mr. Nadler. I am sorry. Could you--you are saying there
should be a private right of action for what exactly?
Mr. Relman. For enforcing Section 3608(e)(5) of the Fair
Housing Act. This is a provision that allows and requires the
duty to affirmatively further fair housing under the Fair
Housing Act. And there needs to be a private right of action
now to enforce that. That would allow us to address these
problems with discriminatory zoning.
And finally, financial conditions is often affected by
disability because the latter may limit one's ability to work.
As a consequence, many people with disabilities depend on
rental subsidies such as the housing choice voucher program to
live in decent, safe, affordable and accessible housing.
But the Fair Housing Act does not explicitly prohibit a
landlord from simply refusing to accept vouchers. So I believe
Congress can end this practice by adopting a prohibition on
source of income discrimination similar to the one in the low-
income housing tax credit program administered by the
Department of Treasury.
And finally, the joint statements that HUD and DOJ have
issued have been enormously helpful to advocates and to lawyers
like myself. These are joint statements on group homes that
have clarified the law, reasonable accommodation and reasonable
modification. And they have been used by thousands of
advocates.
We are puzzled why HUD and DOJ have not taken a similar
approach in other areas, such as with the statute of
limitations, continuing violations, et cetera, to clarify what
the law should say.
Finally, I would just like to sum up by saying a few words
about the role of private firms in fair housing enforcement,
because this is very important. Over the last 2 years, our firm
has been involved in five major enforcement actions, a $10.8
million jury verdict on behalf of an African-American community
in Zanesville, Ohio, a summary judgment ruling in a fair
housing case in Westchester County that led to a $52 million
settlement requiring Westchester to satisfy its duty to
affirmatively further fair housing by building affordable
housing in areas of the county that are less than 3 percent
African-American, as alluded to by Barbara Arnwine, three
findings of contempt against St. Bernard Parish in Louisiana
for denying an affordable housing provider the right to build
multi-family housing, and two lawsuits brought on behalf of the
city of Baltimore and the city of Memphis against Wells Fargo
for targeting African-American neighborhoods for unfair and
predatory loans, as well as the Spanos case referred to by
Shanna Smith.
The questions may fairly be posed, why has so much recent
important fair housing litigation been the product of private
enforcement efforts like our firm? And how, if at all, is this
development related to current or past enforcement efforts by
the Federal Government?
I would like to suggest that what I believe has happened is
that historically the housing and civil enforcement section has
done an excellent job in enforcing the law, both in Republican
and Democratic administrations. All of this, though, changed
with the last Republican administration. Enforcement efforts
eroded significantly not due to the commitment of lawyers,
career attorneys who managed to stay, but due to the departure
of many other experienced career attorneys who found the
environment no longer hospitable to the principles they had
committed to.
The result was both a lack of resources needed to identify
and litigate new cases and absence of leadership needed to
conceive and develop new litigation strategies, both of those
things.
So from 2001 to 2008, the responsibility for litigating
these cases and for enforcing the law fell increasingly to
firms like ours that have the expertise and resources needed to
take on these difficult and complex cutting-edge cases.
Now, in one sense, this is nothing different than what
Justice Douglas envisioned and Congress envisioned when they
first passed the Fair Housing Act. They said that complaints by
private persons are the primary method of obtaining compliance
with the act. This is what Justice Douglas said in the famous
Trafficante case, and it is what Congress intended.
The reality in the years that followed that decision,
though, has proved both prescient and understated, prescient
because private parties and firms played an important role in
enforcing the act, but understated because the role of the
Department of Justice proved far more important than either
Justice Douglas or Congress might have imagined.
The last thing I want to say about this is I think that the
good news is that the Obama administration has renewed the
Federal Government's commitment to fair housing enforcement in
significant and vital ways. Assistant Attorney General Tom
Perez and Secretary Donovan have committed their departments to
agendas that incorporate many of the ideas that are at the
heart of the cases that I mentioned above.
The Westchester case was settled with the assistance of
this Department of Justice. The St. Bernard Parish cases have
become a central focus of Secretary Donovan's current efforts.
And Assistant Attorney General Perez has opened 45 new lending
discrimination investigations, and announced that predatory
lending targeted at minority communities is going to be a
priority enforcement area.
I think, though, that going forward we need to do three
things. The first--and this is my final comment--Congress has
got to provide the Department of Justice and HUD with the
funding needed to fully staff its enforcement work. Second,
Congress has got to adequately fund the fair housing
initiatives program to ensure that fair housing organizations
have sufficient resources to investigate and test to determine
whether housing providers are violating the law.
And third and last, the civil rights division has got to
redouble its efforts to coordinate Federal, State, municipal
and private efforts to enforce the law, working closely with
all of these important stakeholders, to make sure that we
fulfill the purpose and the promise that Congress envisioned
when it first passed the Fair Housing Act.
Thank you very much.
[The prepared statement of Mr. Relman follows:]
Prepared Statement of John P. Relman
Mr. Nadler. Thank you.
And I recognize Ms. Carey for 5 minutes.
TESTIMONY OF REA CAREY, EXECUTIVE DIRECTOR, NATIONAL GAY AND
LESBIAN TASK FORCE ACTION FUND
Ms. Carey. Good afternoon, Chairman Nadler, Members of the
Committee.
Mr. Nadler. Before you continue, let me mention that we
have been joined by the gentlewoman from California, Ms. Chu.
Ms. Carey. On behalf of the National Gay and Lesbian Task
Force Action Fund, the oldest national organization advocating
for the rights of lesbian, gay, bisexual and transgender
people, herein after LGBT people, I thank you for the
opportunity to testify on housing discrimination as it relates
to sexual orientation and gender identity. We are particularly
grateful to be included in this hearing.
For us, the pursuit of the American dream, including
homeownership, is a risky proposition. When our sexual
orientation or gender identity is known, either because we
offer it willingly or a landlord, realtor or lender is made
aware by other means, there is the potential for outright
hostility, property damage, and even physical violence.
Studies show that when callers describe themselves as gay
or lesbian, apartments are more likely to be described as
unavailable. In a 2007 Michigan study, same-sex couples were
shown less desirable properties, were quoted higher rent
prices, or encountered outright refusal to sell or rent
properties.
In 2009, we, together with the National Center for
Transgender Equality, completed a groundbreaking survey of over
6,000 transgender people nationwide. The study showed
transgender and gender-non-conforming people were living at
twice the rates of extreme poverty and double the rate of
unemployment than the general population, despite high levels
of education. Disturbingly, 11 percent of transgender people
reported having been evicted, and 19 percent reported becoming
homeless due to bias.
While the general population has a homeownership of
approximately 68 percent at the time of our survey, our survey
showed only a 32 percent rate of homeownership among
transgender people.
Similarly, LGBT seniors fall within a higher risk category
for housing challenges. We recently released Outing Age 2010
describing the multiple economic and policy barriers LGBT
people face as we age.
LGBT seniors are more likely to be economically fragile due
to the impacts of discrimination over their lifespan. As they
need to move into smaller residences and assisted-living
facilities, seniors are especially vulnerable. Importantly,
amending the FHA will make it more likely they can find safer
housing.
Several court cases mirror the research finding housing
discrimination. For instance, a 2002 case in New York found
housing regulations negatively affected lesbian and gay
tenants. And in 2003, Lambda Legal said it had settled a case
on the basis of anti-gay housing discrimination in Palm Beach
County.
We have received stories from LGBT people who have
experienced discrimination. One couple was forced to tell
potential landlords that they were roommates because they were
harassed and rejected when they had applied as a couple.
In Baltimore, a transgender man upon meeting a potential
landlord was asked if he was a boy or a girl, was confronted
with a $100-per-month increase in the quoted rent, and was told
checks were not accepted. When his friend inquired about the
same apartment, she was told checks were accepted and the rent
was not raised.
This doesn't have to be the reality for LGBT people, but it
is. Thankfully, several jurisdictions have adopted laws to
protect LGBT people from housing discrimination. Twenty States
and the District of Columbia prohibit discrimination on the
basis of sexual orientation, and 13 States and D.C. include
gender identity.
For example, in 2007, Iowa amended its Civil Rights Act of
1965 to include both sexual orientation and gender identity. In
New York City, one of the most comprehensive civil rights laws
in the Nation includes housing protections based on numerous
characteristics, including sexual orientation and gender
identity.
Despite the protections afforded to some LGBT people by
State and local law, Federal protection is necessary. Amending
the FHA would provide base line protections for LGBT people
living outside currently protected jurisdictions. Further,
State and local protections often do not offer robust
enforcement and recourse to victims.
LGBT people suffer pervasive discrimination in so many
areas of their lives. No one should be evicted, be kept from
living in certain areas, or pay more rent simply because of who
they are. Nor should anyone have to lie about who they are in
order to have safe housing.
For all these reasons, the Fair Housing Act should be
amended to ban discrimination on the basis of sexual
orientation and gender identity, and we thank you, Chairman
Nadler, for your leadership on this issue.
[The prepared statement of Ms. Carey follows:]
Prepared Statement of Rea Carey
__________
Mr. Nadler. Thank you.
And I will now recognize Ms. Dark for 5 minutes.
TESTIMONY OF OKIANER CHRISTIAN DARK, ASSOCIATE DEAN FOR
ACADEMIC AFFAIRS AND PROFESSOR OF LAW, HOWARD UNIVERSITY SCHOOL
OF LAW
Ms. Dark. Thank you, Chairman.
Good afternoon and thank you, Chairman Nadler, and Members
of the Committee. I am honored to participate in this
particular hearing about the Fair Housing Act.
As you noted in my introduction, I come to the housing work
in an unusual way. I was a victim of housing discrimination in
Richmond, Virginia, when as a young law professor at the
University of Richmond School of Law I attempted to rent an
apartment and was unable to do so based on my race.
I subsequently brought a lawsuit to challenge the
discriminatory conduct, which was successfully resolved.
However, this particular experience changed me in important
ways, and so I began a life to make contributions wherever I
could to support the fair housing movement.
Recently, or more recently, I have had the opportunity to
serve on the National Commission on Fair Housing and
Opportunity, which was established by leading civil rights and
fair housing organizations in the country. This commission was
formed by the Leadership Conference on Civil Rights Education
Fund, the National Fair Housing Alliance, the NAACP Legal
Defense and Educational Fund, and the Lawyers' Committee for
Civil Rights Under the Law.
The primary purpose of the commission was to investigate
the state of fair housing on the 40th anniversary of the Fair
Housing Act. It was a seven-member bipartisan commission,
superbly led by former U.S. Housing and Urban Development
Secretary, the Honorable Henry Cisneros and the Honorable Jack
Kemp.
In addition, as my written testimony points out, we had
representatives who were distinguished in many ways, and we
held as a group five hearings across the country--Chicago,
Houston, Los Angeles, Boston and Atlanta--and we heard
testimony from many stakeholders, various different interest
groups. But here is the bottom line: The hearings exposed the
fact that despite strong legislation passed, ongoing
discriminatory practices in the Nation's housing and lending
markets continued--residential segregation that results in
significant disparities beyond minority and non-minority
households in access to good jobs, quality education,
homeownership attainment, and asset accumulation.
Now, we produced a report based on those hearings that
have--that set forth nine recommendations. And I am just going
to try to put it in four categories, take the nine and scrunch
it down to four.
First and foremost, we recommended the creation of an
independent fair housing enforcement agency. In order to
address the longstanding and systematic problems with fair
housing enforcement, we recommended this independent agency to
replace the existing fair housing enforcement structure at HUD.
Support for an independent fair housing enforcement agency
was the most consistent theme of the hearing. And as you have
heard from the testimony of Ms. Shanna Smith and Mr. John
Relman, they have identified some of the problems with the
housing enforcement at HUD.
A reformed independent fair housing agency would have three
components: a career staff with fair housing experience and
competence as the key criteria for employment; an advisory
commission appointed by the President with the advice and
consent of the Senate that is broadly represented of all the
groups, industry advocates and enforcers; and an adequate staff
and resources, adequate staff and resources to make fair
housing a reality.
And so that was our number-one recommendation. We had about
three recommendations that I would say address the silo effect.
That is, we have to look at housing in the context of other
areas. It has already been pointed out, housing with health,
housing with safety, housing with employment, housing with
education. All of these areas are impacted.
And so one of our specific recommendations was the
revitalization of the President's Fair Housing Council. The
President's Fair Housing Council, which was established by
Executive Order 12892, would allow for putting all of the
relevant agencies together or departments together so that they
could develop a plan or whenever they were looking at their
plans in particular areas to think about, how would we address
fair housing? How would anything that we are doing directly or
indirectly affect housing?
A third point that I will address has to do with supporting
the Fair Housing Initiatives Program. The Fair Housing
Initiatives Program supports fair housing enforcement and
education, and it provides funds primarily to nonprofits or to
agencies--to nonprofits so that they can address these two
points.
Here is--I will tell the FHIPs are really important. These
folks are on the front line. I guess that is what I want you to
know. They are on the front line, and they need the funds in
order to adequately address the problem.
I know this, because when I had suffered discrimination, I
didn't know what to do. I didn't even know where to go. Someone
told me, ``Call HOME,'' and I said, ``Home?'' They really meant
Housing Opportunities Made Equal. I was like, ``I am already
home.'' But they said, ``Call HOME.''
So I called Housing Opportunities Made Equal. The people
there understood immediately what I was experiencing, a rash of
different kinds of emotions, anger, humiliation, frustration,
and they were extremely helpful in helping me to work through
the process.
Honestly, if I had had to depend on HUD to help me through
that process, we would still be talking about the lawsuit that
should have been brought. But with the help of HOME, I was able
to manage my way through the administrative process of
identifying an attorney, get this case off the ground.
And, by the way, you say, well, you should have been able
to do that anyway, because, after all, you are an attorney, and
a pretty experienced one. But it is different when you are the
plaintiff. It is different when you are the victim.
You are not thinking like, ``Oh, maybe I need to file the
following motion.'' No. That is not what is going on. And so
being a lawyer wasn't helpful at that point. It has helped me
out of the trauma at that moment.
I will say, finally, because I see my time is just about
up, that one of the other points that we found in the hearing--
all of these hearings--is that the link between fair housing
and foreclosure, the foreclosure crisis, was very clear.
The current mortgage crisis definitely has its roots in
decades of discriminatory housing and lending practices. It was
well documented throughout our hearing that essentially, as one
witness put it, the subprime market discovered African-
Americans and Latino communities and targeted them for unfair
and deceptive loan products and lending practices.
That is why the commission strongly recommended that in
order to more effectively address this problem, the Federal
Government must be improved by fostering better coordination
between HUD's administration enforcement of the Fair Housing
Act, the Department of Justice, the bank regulatory agencies,
and the private fair housing groups, prioritizing fair housing
and fair lending litigation to identify and eliminate
discriminatory and predatory lending practices and policies,
and ensuring the legal standard for violation of the Fair
Housing Act and Equal Credit Opportunity Credit Act includes
the well-established disparate impact standard.
So in conclusion, I think Ms. Arnwine pointed it out very
well in her remarks, so I will just repeat it. Fair housing is
the lynchpin for furthering the American dream.
Thank you.
[The prepared statement of Ms. Dark follows:]
Prepared Statement of Okianer Christian Dark
__________
Mr. Nadler. Thank you very much. I will now recognize
myself for 5 minutes to ask some questions.
Ms. Smith, you said that--I think you said that fair
housing organizations cannot take full advantage of their
normal testing methods when it comes to mortgage lending
because it is a felony for testers from fair housing
organizations to apply for a home loan as part of a
discriminatory lending test. Can you elaborate on that? Why is
it felony? And what can we do about it?
Ms. Smith. We can do pre-application testing, but to test
throughout the process, you actually have to complete an
application. And when you look at the mortgage loan
application, it says if you put any untruthful information on
there, it is a felony.
And while we have done some full application testing, it
has been using people's true information. If we are going to be
able to catch these scammers, to continue to test regular
banking institutions, we need to test through the process,
because I have been doing this for 35 years.
Mr. Nadler. Granted that necessity, what do you think our
response to this limitation on your ability should be?
Ms. Smith. What I would like to see is an amendment to that
part of the mortgage loan application granting the opportunity
to do full application testing, but I don't think we can just
say, oh, anybody can do it. I think we need to run it through
the Justice Department and create the identities with the
cooperation of the housing section of Justice and the lending
experts, and then qualified fair housing organizations could
apply to Justice and say, ``This is our testing methodology.
This is a program. We need 15''----
Mr. Nadler. So Justice, in effect, would have to license or
recognize specific organizations to do this?
Ms. Smith. Yes. And I think that would have good quality
control so that not just anybody goes out and tries to do this
kind of full application testing. We do testing with Justice
now.
Mr. Nadler. I understand that. Okay, thank you.
Let me ask Ms. Carey, the Michigan Fair Housing Center
produced a report a couple years ago that examined sexual
orientation housing discrimination in Michigan. I understand
that HUD just announced to examine in its nationwide decennial
study in housing discrimination, discrimination based on sexual
orientation and gender identity, but the Michigan study is
really the first formal attempt to look at this type of housing
discrimination.
How do you think we get the government housing
organizations and other interested entities to collect data and
develop responses to housing discrimination directed at the
LGBT community?
Ms. Carey [continuing]. Excuse me. Certainly the inclusion
of lesbian, gay, bisexual and transgender concerns in this
Subcommittee hearing is a notable marker for the government
addressing the issue, and we are very thankful for it.
We are very supportive of HUD pursuing the path that they
have talked about in terms of finding out more about
discrimination against LGBT people through their nationwide
study and are pleased that they have started their town halls.
We certainly offer our expertise and those of our colleague
organizations to ensure that not only couples are--that HUD is
not only gathering information on couples, but on individuals,
that we are not just looking at urban areas, but also rural
areas where discrimination----
Mr. Nadler. So this is a question of administrative action
by HUD?
Ms. Carey. Well, I would also add that while HUD is
conducting its study, it is our position that we very much need
for the Fair Housing Act to be amended to include sexual
orientation and gender identity. As we have talked about in our
testimony----
Mr. Nadler. Well, we introduced that legislation----
Ms. Carey [continuing]. People are experiencing the
discrimination now.
Mr. Nadler. I introduced that legislation today, along with
several others, as you know. Absent that legislation being
approved, does HUD have jurisdiction here?
Ms. Carey. I am sorry?
Mr. Nadler. Without that legislation being approved, does
HUD have jurisdiction to engage in this type of testing or
looking into it?
Ms. Carey. Yes. HUD has--as many people know, HUD has
conducted other tests before on racial discrimination, and we
are pleased that they will be including sexual orientation and
gender identity. However, the piecemeal protections across the
country that exist in municipal and State law is not enough for
many people who are experiencing discrimination, so we very
much need the Federal law.
Mr. Nadler. Thank you.
Dean Dark, could you respond to the argument that has been
made that the Community Reinvestment Act and other efforts to
provide low-and moderate-income individuals and families with
access to homeownership are responsible for the prevalence of
subprime loans and for the foreclosure crisis?
Ms. Dark. Well----
Mr. Nadler. I gather from your expression you don't agree
with that particular----
Ms. Dark. I am sorry. I just----
Mr. Nadler. I gather from your expression you don't agree
with that statement.
Ms. Dark. Oh, I definitely disagree with the statement. I
guess my response would be that--to take a look at the record,
which was extensive, that the commission had--I mean, the
commission was able to establish, by looking at exactly what
happened.
And so I will just share with you some testimony from Mr.
Jose Hernandez, who is a real estate broker in Sacramento area,
and he was experienced in residential sales and financing. He
stated that generally subprime lenders target borrowers who
have poor credit histories with mortgage products that bring an
unusually high yield to lending institutions and their
investors.
That is what happened, such excessive profit margins
realized through a pricing structure that includes periodic
interest rate increases, prepayment penalties, balloon
payments, that sort of thing, so that the subprime borrowers
were six to nine times more likely to be in foreclosure.
Mr. Nadler. Of course.
Ms. Dark. That is the kind--that is what.
Mr. Nadler. Let me ask you a different question on the same
area. The Chicago Reporter found that, of the more than 8.5
million mortgages granted nationwide in 2006, African-American
borrowers were nearly 2.5 times more likely than their White
counterparts to get so-called high-cost home loans and that the
racial gap was even wider among the wealthier individuals. So
you are not talking about poor people. African-Americans
earning $100,000 a year or more were three times more likely
than their White counterparts to get high-cost loans.
With these statistics, and having been a victim of housing
discrimination, can you speak to how class or education may not
protect against discriminatory housing practices in this area,
in sales, rent, or lending?
Ms. Dark. I guess what I wanted to say is that no one sees
the education or sees the fact that you are--they don't see it.
They see that you are Black. And so they may--so you don't get
offered the various products. It doesn't mean this is----
Mr. Nadler. And the education--the fact that you are a
professor of English literature doesn't necessarily mean that
you are----
Ms. Dark. It doesn't mean that you are necessarily up to
date or that you are very knowledgeable----
Mr. Nadler. That you are going to be wise to these scams.
Ms. Dark. Right, all of the real estate process. You depend
a great deal, of course, on the people that are helping you
through the process, and you try to get yourself up to speed,
but when you are going through the process, it doesn't
necessarily mean just because I am--that I would know, I would
know.
But I just want to emphasize that just--you know, they
don't--when someone just doesn't see that you are a whole
person, they only see your color, that is what happened with
this lady. She just couldn't see me in the apartment. She could
only see that I was Black. She didn't ask me--she didn't have
any questions about my ability----
Mr. Nadler. She saw the obvious.
Ms. Dark. Correct.
Mr. Nadler. Thank you.
I have one more question, and then we will turn to Ms. Chu.
Mr. Marcus, I started asking you this before. You mentioned the
Supreme Court's decision or lack of decision or coming
decisions confronting the question of disparate impact. You
said you thought they might not uphold it.
If the Supreme Court were to go the--were to say that
disparate impact, unlike all the circuit courts, if the Supreme
Court were to overturn the circuits and were to do so on a
constitutional basis, what could we do about it?
Mr. Marcus. What the circuit courts have dealt with is the
statutory question, but I think you are asking me now about the
constitutional question, and it is a good question. What do we
do about it?
Now, if the Supreme Court finds that the disparate impact
doctrine as currently understood is inconsistent with equal
protection, they could do one of two things. They could narrow
it themselves and fix it, or they could strike it down and ask
you to put it back together again.
If they do the latter, there will be a period of time where
disparate impact is not available, which has a sort of
implication that you can imagine. If you want to anticipate
that and to address the doctrine before the Supreme Court deals
with it, there are things that you could do to ensure that
disparate impact is not used in a way that violates equal
protection.
The concern is that disparate impact in some cases is used
to address something other intentional or unconscious
discrimination and used in a way that can push institutions
either to use quotas or other surreptitious means of involving
racial preferences or otherwise act in a way that is
inconsistent with the Constitution.
A way of addressing that is ensuring something like a good
faith defense as a way of addressing a charge of discrimination
as a means of ensuring that the disparate impact doctrine is
used only to target essentially intentional or unconscious
discrimination even when it is hard to find through disparate
treatment analysis.
Mr. Nadler. Thank you.
I will now yield to the gentlelady from California, Ms.
Chu.
I don't yield. I recognize her.
Ms. Chu. Thank you, Mr. Chair.
Well, I live within a district in Los Angeles, and last
November, a major real estate owner, Donald Sterling, the L.A.
Clippers owner, settled with the Justice Department for $2.75
million over a discrimination case. He owned around 120
apartment buildings in the L.A. area and was discriminating
based on race.
Some apartment buildings were supposed to be Asian-only and
some were supposed to be Latino-only and so on and so forth.
And it is clear that many tenants don't know if this is illegal
or don't know that there are apartment buildings that are off-
limits because they aren't advertised or targeted to the
community.
Now, Craigslist does do a superb job in informing both
prospective tenants and landlords who post ads what their
rights and responsibilities are, but what kind of requirements
do rental or housing companies in general have to make sure
that prospective residents or buyers are aware of the law? And
should the Fair Housing Act be changed to make sure that there
is greater awareness amongst tenants for prospective tenants?
And in fact, should it be changed to accommodate language and
cultural issues?
Yes?
Ms. Smith. I don't think we have to actually change the
Fair Housing Act. What would be useful--well, first of all,
landlords--the California Apartment Association is one of the
best in the country. They have excellent education programs
that go out.
But when people walk into an apartment complex, there is no
fair housing material or literature available to them. So if
the Fair Housing Initiative Program had funding in the national
media part of it to create these kinds of materials that could
either be downloaded and printed by an apartment complex, real
estate agents, or as they are now, available, that we make
available to communities, that would be useful.
Craigslist only recently put up more information about the
Fair Housing Act. But what we found in our investigation of
Craigslist, where we found 7,500 violations of the Fair Housing
Act, we filed 1,000 complaints with HUD. And when we were
talking to the people who posted the ads, they said to us they
simply would cut and paste existing ads and those existing ads
had discriminatory statements in it.
So we think Craigslist has to go a step farther, like
newspapers do. They have a filter put in so that the
discriminatory language can't be published at all.
And, you know, Craigslist and other Internet providers
could create those same kinds of filters that, you know,
thousands of newspapers have used since 1988, particularly in
this area.
But we need more money in the Fair Housing Initiatives
Program. We need to have Congress tell HUD that the education
campaign that we do now, we educate potential victims of
discrimination, but we also educate the industry.
And if we had more money to do that kind of education, to
have prints, posters that could go to all the apartment
complexes, so that when I walk in, I may not know anything
about the Fair Housing Act, but it is up there, and we could--
we have special ads that talk about sexual harassment in
housing.
And if those were in the apartment complexes, people could
see that and go, ``Well, you know what? You can't do that to
me, because here is what the law says.''
And apartments have large, quick turnover of managers. So
it is very hard to make sure your employees, if you are an
apartment owner, are always following the law. And this kind of
literature right in the apartment manager's office, in the
community rooms, in the laundry facilities would be very
useful.
Ms. Chu. Are they required to post it?
Ms. Smith. No. There is absolutely no requirement for
anybody to post anything about the Fair Housing Act.
Ms. Chu. Wouldn't it be good to have such a requirement?
Ms. Smith. I think that would be very useful to have that
requirement. At the national commission hearing, people also
talked about landlords having a census about people who live
there. We often talk to real estate companies to say, when you
are showing houses, why don't you create maps to see if your
real estate agents are really showing people of all races and
national origins homes in that same price range so that they
can self-monitor to make sure that nobody is limiting someone's
choice?
With lenders, they do have the equal lending opportunity
slogan that is required, but any more information about what
discrimination looks like in lending is not required. And I
just refinanced my house last year. At first, they didn't know
I was the president of the National Fair Housing Alliance. They
just saw a name, ``Shanna Smith,'' and their profiling of that
name was for an African-American.
And then, they were not giving me good rates, and I had 799
credit score, and I wanted a 15-year conventional loan,
couldn't get an offer on that. Then, when I put my signature as
National Fair Housing Alliance, somebody responded, but I had
to go through four closings because they made mistakes with my
interest rates, the APR, and the closing cost, and they knew
who I was.
So with Congressman Nadler, you are saying, does education
matter? If they think they can get away with this, they will
just make these changes at the last minute, and most of us
don't read those documents. So if it was possible to have
more--not a long piece of paper describing things, but even
just the print ads that tell people very cleverly what to watch
out for and how to recognize discrimination and where to report
it. And that just doesn't exist in the housing, lending or
insurance industry right now.
Ms. Chu. Well, my time is up, but it just seems to me that
if in work places you are required to post something about
labor laws, that there should be some way that a similar thing
should be posted or information should be handed out.
And I don't know. Could the other persons respond here?
Mr. Nadler. By all means.
Ms. Arnwine. Yes, I was going to make that precise point,
that we are required to as employers to post, you know,
employment notices of equal opportunity and other kind of wage
and hour notices. There is no reason why there should be any
limitation on the same kind of, you know, requirement for
posting, you know, fair housing laws or requirements.
I think that, also, you know, Shanna and, you know, NFHA
and so many fair housing agencies have done a great job of
testing. And I think more testing is necessary, that that is
one of the reasons why, you know, FHIP money is so critical, so
that you can then find out affirmatively that there are these
practices that are blocking people and you can also have the
opportunity through more of these fair housing agencies to hear
from people when they are in segregated housing, because this
reality of multiple-unit apartments with identifiable towers
that are African-American, that are White, that are Asian, that
are, you know, Latino, we see it all the time. But it is a lack
of people, as you said, understanding that that is, in fact,
steering and that it is a violation of the law, and that that
is also critical.
I also wanted to say, on the question that was brought out,
I think, regarding the fair lending, you know, practices and
what can be done about them, you know, I just want to--you
know, and the whole characterization of this is the fault of,
you know, subprime mortgages, really, the fault of African-
American and Latino communities, I just wanted to say that that
can be one of the most infamous and notorious, you know, themes
that I have heard running around in the Congress.
I think that what people need to look at is some of the 23
cases that have been filed by the National Consumer Law Center
where they have, you know, really shown in their allegations
how discretionary pricing practices of banks actually included
the practice of producing yield spread premiums to brokers,
thereby incentivizing the discriminatory marketing and pricing
of expensive subprime loans. You made more money if you did the
subprimes.
And in African-American communities too often, the prime
lenders are missing. And that is one of the big issues, that--
you know, I live in Prince George's County, which has been
really hit hard by this subprime crisis, and a lot of people
who were eligible for prime loans were steered into subprime
loans.
This is really a tragedy. It is something that has led to--
you know, it is an incredible crisis for those borrowers when
they should have been into different loan instruments that
would have been more favorable to them, more affordable.
But also I just want to say lastly that no African-American
community created any CDOs or any of these horrible financial
instruments that led to the financial crisis. So I just want
everybody to, you know, remember that we bundled nothing. We
were victims here, drastically.
Mr. Nadler. Thank you very much. The time of the gentlelady
is expired. All time is expired.
Without objection, all Members will have 5 legislative days
to submit to the Chair additional written questions for the
witnesses, which we will forward, and ask the witnesses to
respond as promptly as they can so that their answers may be
made part of the record.
Without objection, all Members will have 5 legislative days
to submit any additional materials for inclusion in the record.
And with that, I would like to thank the witnesses and the
Members. And the hearing is adjourned.
[Whereupon, at 3:10 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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Material Submitted for the Hearing Record
Prepared Statement of the Honorable F. James Sensenbrenner, Jr., a
Representative in Congress from the State of Wisconsin, and Ranking
Member, Subcommittee on the Constitution, Civil Rights, and Civil
Liberties
The Obama Justice Department has made it clear it intends to follow
the Clinton Administration and file more lawsuits under what is called
the ``disparate impact'' theory. Disparate impact lawsuits challenge
practices that lead to statistically worse results for a particular
group relative to other groups without alleging that the practice is
actually discriminatory in its terms, design, or application. That is,
disparate impact lawsuits claim there is discrimination when there is
often no discrimination at all under any reasonable definition of the
term.
Disparate impact theories arose out of Title VII of the Civil
Rights Act of 1964, which was designed to protect individuals from
intentional discrimination in employment. The Senate floor managers of
Title VII, Senators Clifford Case and Joseph Clark, made clear that
Title VII prohibited only intentional discrimination, and that it did
not require statistical parity in hiring. In their exhaustive
memorandum distributed prior to Senate debate on the bill, the Senators
wrote ``There is no requirement in title VII that an employer maintain
a racial balance in his work force.'' This was reiterated by Senator
Hubert Humphrey, who said ``If [a] Senator can find in title VII . . .
any language which provided that an employer will have to hire on the
basis of percentage or quota related to color, race, religion, or
national origin, I will start eating the pages one after another,
because it is not there.''
But then Alfred Blumrosen, the Equal Employment Opportunity
Commission's first chief of compliance, admitted in a law review
article years later that he employed ``[c]reative administration'' to
draft regulations under Title VII allowing disparate impact claims He
admitted that those regulations did not ``flow from any clear
congressional grant of authority.''
When those regulations were challenged in court, liberal Justice
Harry Blackmun wrote that ``I fear that a too-rigid application of the
EEOC guidelines will leave the employer little choice, save an
impossibly expensive and complex validation study, but to engage in a
subjective quota system of employment selection.''
With Justice Blackmun's concerns in mind, the Supreme Court, in a
1989 case called Wards Cove Packing Co. v. Atonio, made clear that the
regulations must be subject to what it called ``a reasoned review of
the employer's justification for his use of the challenged practice
[such that] there is no requirement that the challenged practice be
`essential' or `indispensable' to the employer's business for it to
pass muster.''
But then Congress responded two years later by legislatively
overruling that reasonable interpretation of the regulations in Wards
Cove. That legislation passed over my opposition. As a result,
disparate impact lawsuits were encouraged.
The abuse of the disparate impact theory in courts has had real-
world consequences. There were many pressures on mortgage lenders to
relax the standards under which loans were extended in the 1990's. But
one factor was the Clinton Administration Justice Department's
aggressive pursuit of disparate impact claims in which it sought to
prosecute entities whose mortgage lending policies did not
intentionally discriminate, but only had a disparate impact on one
group or another.
In 1998, for example, Clinton Administration Housing Secretary
Andrew Cuomo announced the results of a federal lawsuit settlement in
which a bank was made to extend $2 billion in loans to people who posed
a greater credit risk. Secretary Cuomo even admitted during a press
conference televised on C-Span that ``the 2.1 billion, lending that
amount in mortgages, will be a higher risk and I'm sure there'll be a
higher default rate on those mortgages than on the rest of the
portfolio.''
A leading article published in the Banking Law Journal at the time
made clear that ``Lenders relying on written standards and criteria in
making decisions as to whether to grant a residential mortgage loan
application run the risk of exposure to liability under the civil
rights law doctrine known as disparate-impact analysis. . . . Several
underwriting guidelines that are fairly common throughout the mortgage
lending industry are at risk of disparate-impact analysis [including]
creditworthiness standards.''
At the same time, in order to alleviate disparate impacts in
lending, the Federal Financial Institutions Examination Council issued
a report that suggested to lenders that, rather than focusing on credit
history as defined in a credit report, such lenders should focus on
evidence of a borrower's ability and willingness to repay a loan,
including a record of regular payments for utilities and rent.
These lawsuits pressured lenders to bend traditional and time-
tested accounting rules and extend more mortgages to many who could not
afford them. These relaxed lending standards are now widely regarded as
being a prime cause of the current financial crisis. Even The
Washington Post editorialized that ``the problem with the U.S. economy
. . . has been government's failure to control systemic risks that
government itself helped to create. We are not witnesses a crisis of
the free market but a crisis of distorted markets . . . [G]overnment
helped make mortgages a purportedly sure thing in the first place.''
In our efforts to enforce the nation's housing laws, I hope we do
not repeat past mistakes. I look forward to hearing from all our
witnesses today.
Prepared Statement of Joe Solmonese, President,
Human Rights Campaign