[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∣=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

                              ----------                              


               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





                                 
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