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WBK Industry News - Federal Regulatory Developments

HUD declares that People with Limited English Proficiency are Protected under the FHA

The U.S. Department of Housing and Urban Development (HUD) issued guidance that states that the Fair Housing Act (FHA) protects people with limited English proficiency (LEP) against discrimination.  This is the first time that HUD has interpreted the FHA to cover LEP borrowers.  Almost nine percent of the U.S. population is limited in English proficiency, according to HUD. 

The HUD guidance instructs that although individuals who are LEP are not a protected class under the FHA, discrimination based on LEP is a type of national origin discrimination because LEP is closely linked to physical, cultural or linguistic characteristics of persons from a foreign geographic area.

“Because of the close nexus between LEP and national origin, the distinctions between intent and effects claims involving LEP and national origin are often subtle and can be difficult to discern,” the HUD guidance comments.

Examples of intentional discrimination in the context of mortgage lending include refusing to allow an LEP borrower to have mortgage documents translated, or refusing to provide the borrower with translated documents that the lender or mortgage broker has readily available.  The HUD guidance also states that restricting a borrower’s use of an interpreter, or requiring that an English speaker cosign a mortgage, likely constitutes discrimination.

In addition, the guidance addresses how a housing provider’s policy and practices may unintentionally violate the FHA under the disparate impact theory of discrimination. The guidance explains that such facially neutral policies and practices are analyzed under the traditional three-step-burden-shifting analytical approach for establishing discriminatory effect liability. In such cases, the analysis involves assessing the discriminatory effect; evaluating whether the policy or practice is necessary to achieve a substantial, legitimate, nondiscriminatory interest; and, if so, evaluating whether there is a less discriminatory alternative policy or practice. 

The HUD guidance document is available here: http://portal.hud.gov/hudportal/documents/huddoc?id=lepmemo091516.pdf.