Saturday, July 15, 2017

Reformism: The Fair Housing Act of 1968

“We can move in that direction as a country, in greater polarization, black people amongst blacks, and white amongst whites, filled with hatred toward one another. Or we can make an effort, as Martin Luther King did, to understand and to comprehend, and replace that violence, that stain of bloodshed that has spread across our land, with an effort to understand, compassion and love.....What we need in the United States is not division; what we need in the United States is not hatred; what we need in the United States is not violence and lawlessness, but is love and wisdom, and compassion toward one another, and a feeling of justice toward those who still suffer within our country, whether they be white or whether they be black.” - Robert F. Kennedy

The Fair Housing Act of 1968 (42 U.S.C.A. §§ 3601-3631) is also known as Title VIII of the Civil Rights Act of 1968. Congress passed the act in an effort to impose a comprehensive solution to the problem of unlawful discrimination in housing based on race, color, sex, national origin, and religion. The Fair Housing Act has become a central feature of modern Civil Rights enforcement, enabling persons in the protected classes to rent or own residential property in areas that were previously segregated. The Department of Housing and Urban Development is charged with enforcement of the act. It issues regulations and institutes investigations into discriminatory housing practices.

The law was signed by President Johnson during the national riots that were breaking out after the assassination of Dr. Martin Luther King, Jr. The passage of the Fair Housing Act came after the failure of two earlier federal initiatives. A 1962 Executive Order, signed by President John F. Kennedy, directed all departments of the Executive Branch to take appropriate actions to prevent discrimination in all federally administered housing programs. The Civil Rights Act of 1964 contained language in Title VI that prohibited housing discrimination in any program receiving federal financial assistance. Although Title VI provided that a recipient of funding who was found in violation could be prevented from continuing receipt of governmental assistance, this sanction was rarely used.

The Fair Housing Act prohibits discriminatory conduct by a variety of legal entities. The act defines "person" to include one or more individuals, corporations, partnerships, associations, labor organizations, legal representatives, mutual companies, joint-stock companies, trusts, unincorporated organizations, trustees, receivers, and fiduciaries. In addition, municipalities, local government units, cities, and federal agencies are subject to the law.

The act explicitly defines a list of prohibited practices involving housing, including sales, rentals, advertising, and financing. Its primary prohibition makes it unlawful to refuse to sell, rent to, or negotiate with any person because of that person's race, color, religion, sex, familial status, handicap, or national origin. The Fair Housing Amendments Act of 1988 added extensive provisions that apply to discrimination against disabled persons and families with children 18 years of age and under.

It is illegal under the Fair Housing Act to discriminate in the sale or rental of a dwelling because of the disability of the buyer or renter, a person who will reside in the dwelling after it is sold or rented, or any person associated with the buyer or renter. It is not illegal, however, to refuse to rent or sell housing to an individual, with or without a disabling condition, whose tenancy would constitute a direct threat to the health or safety of other individuals or whose tenancy would result in substantial physical damage to the property of others. Newly constructed multi-family dwellings must be designed so that the public and common-use portions are accessible to people with disabilities.

The Fair Housing Act also prohibits discriminatory advertising practices in the sale or rental of housing. Advertising may not disclose a "preference, limitation or discrimination" based on any of the protected categories of persons. The media company that runs an offensive advertisement or other statement may be held liable, as may the advertiser. Subtle advertising strategies, such as the selective use of minority-identified media for the marketing of segregated and over-priced housing to minorities, and the use of code words, such as "exclusive" neighborhood, in the text of the realty classified advertisements, violate the act. The law reaches unpublished statements including discriminatory expressions and conduct, such as a landlord's instructions to his rental agent, superintendent, or other employees that they should either not rent to blacks or that they should give a preference to whites or certain other ethnic groups.

The law makes it illegal for an owner or his agent to represent to any member of any statutorily protected class that a dwelling is unavailable for inspection, rental, or sale, when, in fact, it actually is available. The act has been found to have been violated by a realty firm that posted "sold" signs on the lawns of a white neighborhood in an attempt to discourage minorities from purchasing houses in the neighborhood.

The Fair Housing Act also sought to end a practice called "blockbusting," the practice by realtors of frightening homeowners by telling them that people who are members of a particular race, religion, or other protected class are moving into their neighborhood and that they should expect a decline in the value of their property. The purpose of this scheme is to get homeowners to sell out at a deflated price. In alleged blockbusting cases, the courts have focused on what was heard, rather than what was said. Even in the absence of wrongful intent by the real estate salesman, or explicit reference to a protected class, liability will attach if the reasonable homeowner believes that the salesman is trading on his assumed fear of minorities to stimulate that homeowner to list his house for sale.

Although the primary focus of the law is to protect prospective renters and buyers of real estate, the Fair Housing Act also protects real estate agents who are members of the protected classes. Real estate brokerages may not set different fees for membership in multiple listing services, and may not deny or limit benefits accruing to members in real estate brokers' organizations. In addition, brokerages may not establish geographic boundaries, office location, or residence requirements for access to, or membership in, any real estate-related organization, based on an individual's membership in any of the statutorily protected categories.

Congress worked to identify all components of the housing industry that might discriminate against persons in the protected classes. This explains why the Fair Housing Act governs the housing financing industry. Banks and financial institutions may not discriminate when financing the purchase, construction, improvement, repair, or maintenance of a house. This section of the act also applies to the selling, brokering, or appraising of residential real estate.

Despite the apparent breadth of the law, Congress did exempt several classes of defendants from coverage. It does not apply to single family homeowners if they sell or rent their homes without the use of a real estate agent or other person who is in the business of selling and renting homes. In addition, the homeowner must not use advertising that indicates a discriminatory preference. This exemption applies to only one sale within a 24-month period. Multiple-family homeowners are exempt if no more than four families reside in a dwelling, including the owner. The act also grants exemptions to religious organizations, private clubs, and Senior Citizens, subject to some limitations.

The provisions of the Fair Housing Act may be enforced by HUD and through "pattern and practice" lawsuits brought by the Attorney General of the United States. A person who alleges discrimination may file a complaint with HUD. If the department believes that the claim has merit, the matter will be referred to an administrative law judge for a hearing. The judge is empowered to award actual damages, equitable relief, and attorneys' fees to the prevailing party. The judge also may assess civil penalties against the violators, which can range from $25,000 to $50,000. The judge may not award Punitive Damages nor require Affirmative Action of the violator, however.

In addition, a private citizen may also file a civil lawsuit in federal court against the alleged violator of the act. Finally, the Attorney General may file a civil lawsuit when there is evidence of a pattern or practice by the alleged violator that extends beyond one or two victims. When the Attorney General prevails in these types of lawsuits, the act allows the awarding of injunctive relief and monetary damages to the aggrieved party. In addition, the court may assess civil penalties against the violator up to $50,000 for a first violation and up to $100,000 for any subsequent violation.

How Does This Relate to Reformism?

A Variable-Rate Mortgage, Adjustable-Rate Mortgage, or Tracker Mortgage is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets. The loan may be offered at the lender's standard variable base rate. There may be a direct and legally defined link to the underlying index, but where the lender offers no specific link to the underlying market or index the rate can be changed at the lender's discretion. The term "variable-rate mortgage" is most common outside the United States, whilst in the United States, "adjustable-rate mortgage" is most common, and implies a mortgage regulated by the Federal government, with caps on charges. In many countries, adjustable rate mortgages are the norm, and in such places, may simply be referred to as mortgages.

Among the most common indices are the rates on 1-year Constant-Maturity Treasury Securities, the Cost of Funds Index, and the London Interbank Offered Rate. A few lenders use their own cost of funds as an index, rather than using other indices. This is done to ensure a steady margin for the lender, whose own cost of funding will usually be related to the index. Consequently, payments made by the borrower may change over time with the changing interest rate. Alternatively, the terms of the loan may change. This is distinct from the graduated payment mortgage, which offers changing payment amounts but a fixed interest rate. Other forms of mortgage loans include the interest-only mortgage, the fixed-rate mortgage, the negative amortization mortgage, and the balloon payment mortgage.

Pictured here in 2010, Ara Sparkman, 40, looks over her belongings after getting evicted from her home in Milwaukee, Wisconsin. Living on a single income, when the interest rate on her Adjustable-Rate Mortgage sky rocketed, she was no longer able to afford the payments on her home.

Adjustable rates transfer part of the interest rate risk from the lender to the borrower. They can be used where unpredictable interest rates make fixed rate loans difficult to obtain. The borrower benefits if the interest rate falls but loses if the interest rate increases. The borrower benefits from reduced margins to the underlying cost of borrowing compared to fixed or capped rate mortgages. What all of this jargon basically means is that the government allows lenders to make predatory loans to people knowing that interest rates are going be to going up over time, knowing full well that it is very possible that the borrower may not be able to compensate for the increase, and also knowing full well that their practices are likely in direct violation of the financing regulations of the Fair Housing Act.

Another thing that is not commonly announced is that these predatory loans are most usually commonly approved for African Americans and other minorities, the very people that are supposed to be protected by the Fair Housing Act. In addition to this, there are a laundry list of federal assistance programs that are available to people who are in jeopardy of losing their homes because the rate on their loan rose to an unmanageable level, and their lenders are technically required, per the Fair Housing Act, to inform them about these options. However, many lenders take advantage of their borrowers ignorance of the law and never inform their borrower of these options, and this includes federal lending agencies. They do so, of course, because they want to turn the property over as quickly as possible so as to sustain their profit margin. See, the government gives to the people in one hand and takes away from them in the other.

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