Regulatory News

(October 2019)

Comments due October 18th on HUD rule eliminating the use of “disparate impact” analysis to prove illegal discrimination under the Fair Housing Act

The Department of Housing and Urban Development has proposed a new rule that will make it harder to win discrimination cases for violations of the Fair Housing Act, which protects people from being treated differently on the basis of race, color, national origin, gender, religion, disability and familial status when they are getting a mortgage, buying a home or renting an apartment. For forty five years, the courts have relied on a legal theory called “disparate impact” to evaluate whether practices that have a disproportionate impact on groups of people without a legitimate justification violate the civil rights laws, even if the discrimination is not intentional.

NCST believes that elimination of this legal theory will make it harder to prevent discrimination in mortgage lending, home purchases, and apartment rentals in the communities that our buyers work in.   Please consider sending a comment letter into HUD before the October 18th deadline.  Additional information, social media resources, and a template comment letter can be found at


A win for the housing counseling industry

For the past several years, mortgage lenders and housing counseling agencies that wanted to set up a fee-for-service arrangement have not done so due to concerns that such an arrangement could inadvertently violate the Real Estate Settlement Procedures Act (RESPA), which forbids “kickbacks” to lenders and other participants in mortgage transactions.  In response to these concerns, the Consumer Financial Protection Bureau has just issued a regulatory notice called a “No-Action Letter Template” at the request of the Department of Housing and Urban Development that will allow mortgage lenders to enter into funding arrangements with housing counseling agencies that participate in HUD’s Housing Counseling Program.

What this means is that lenders can now pay agencies for housing counseling services if those services meet the parameters set out in the No-Action Letter. Lenders will not have to worry about enforcement actions from the CFPB if they adhere to the guidance in the template.  For example, clients must be able to choose from products offered from at least 3 different lenders, the funding must be for services rendered and not on the terms and conditions of the mortgage, and no preferential treatment can be given to the company funding the services. The lenders and housing counseling agencies are required to enter into a Memorandum of Understanding that is consistent with these policies and to make the MOU available to the CFPB when asked.

Mortgage lenders can apply to the CFPB for No-Action Letters based on the No-Action Letter Template published here and the explanation here.


Kris Siglin is NCST’s Vice President of Policy and Partnerships.