There are few things as stressful as finding a new place to live. Housing and shelter is a basic human need, after all. But when you decide to hunt for a new apartment, buy your first home, or sell and move, how do you know if you’ll be treated fairly?

If you overpay for a house compared to your neighbors, you could end up underwater on your mortgage. Paying more to rent an apartment than your neighbor could cost you hundreds of dollars more. Recognizing housing’s importance in most people’s lives, the government has passed laws to ensure fairness in the housing market.

According to Meris Bergquist, Executive Director of the non-profit Massachusetts Fair Housing Center, “Before the FHA became law, landlords and home sellers could openly — and without consequence — refuse to rent or sell their dwellings to qualified applicants because of their race, color, national origin, religion, sex, familial status, and disability.”

Knowledge is power. When it comes to protecting yourself from discrimination or abuse in the housing market, you’ll want to learn about the Fair Housing Act.

The Capitol, where the Fair Housing Act was created.
Source: (Vlad Tchompalov / Unsplash)

What is the Fair Housing Act?

The Civil Rights Act of 1968 contains two sections — Titles VIII and IX — meant to address discrimination in housing. This is what’s known as the Fair Housing Act.

Legislators included these titles in part due to redlining. Redlining, or refusing to extend mortgage loans to people who lived in certain neighborhoods based on its racial composition, created segregated neighborhoods.

Otherwise creditworthy families couldn’t access mortgages or other credit products. If they could get a loan, they received worse terms and paid higher interest rates than similarly qualified borrowers of a different race. Paying more for their loan resulted in higher foreclosure rates and lost generational wealth.

“The FHA as a whole was intended to have broad authority to outlaw housing discrimination throughout the nation and encourage racial integration,” says Bergquist.

Several other acts were also included in this legislation apart from Titles VIII and IX, which can get confusing. Sometimes, you’ll hear the terms Fair Housing Act and Civil Rights Act used interchangeably.

Congress passed the act a week after Martin Luther King Jr’s assassination. It outlines most of the protections we enjoy around housing.

Who’s protected by the Fair Housing Act?

The act prohibits discrimination on the basis of:

  • Race
  • Color
  • National origin
  • Religion
  • Sex
  • Familial status
  • Disability

This means that landlords, sellers, real estate agents, mortgage brokers or loan officers, and other roles involved in real estate transactions cannot discriminate against you based on any of these characteristics.

Not every listed characteristic had protection immediately; sex wasn’t added until 1974, and some communities still lack inclusion.

The LGBT community is still fighting to expand the Act to include sexual orientation. Twenty-one states have passed their own anti-discrimination laws for sexual orientation. These states are:

  • California
  • Colorado
  • Connecticut
  • Delaware
  • District of Columbia
  • Hawaii
  • Illinois
  • Iowa
  • Maine
  • Maryland
  • Massachusetts
  • Minnesota
  • Nevada
  • New Hampshire
  • New Jersey
  • New Mexico
  • New York
  • Oregon
  • Rhode Island
  • Vermont
  • Virginia
  • Washington

Buyers, sellers, and renters in states without these additional laws are not protected from housing discrimination on the basis of sexual orientation.

A building of apartments that adhere to the Fair Housing Act.
Source: (Charlie Harutaka / Unsplash)

What does the act outlaw?

The act’s provisions attempt to address every aspect of housing where discrimination could exist — from renting to buying or selling a home. Its goal is to ensure equal opportunities for everyone in the housing market.

Mortgage-related discrimination

Regardless of your race, color, national origin, religion, sex, disability, or familial status, lenders must treat you the same. For example, lenders cannot refuse to make a loan or provide financial assistance for housing to a person of color that they would offer to a white person.

Lenders also have to provide information around available loans to all borrowers to ensure fairness. Even if the bank discloses all their available mortgage products, a loan officer could still push borrowers toward a different product on the basis of race or other protected factors, which violates the Act.

In 2019, Wells Fargo had to pay a large settlement to the city of Philadelphia. The city sued the lender, alleging that Wells Fargo steered black and Latinx borrowers into higher-cost or higher-risk loans, even when those borrowers had good credit or a financial profile that should have qualified them for a better loan. The practice contributed to much higher foreclosure rates in minority neighborhoods.

The FHA also prohibits sexual harassment, including quid pro quo activities such as requiring a borrower to engage in a sexual act to obtain housing or housing-related services (it can even apply to maintenance workers).

The same protections apply in the secondary market, where loans are bought and sold after origination. If lenders were allowed to discriminate in the secondary market and could refuse to purchase a loan in (for example) a traditionally Black neighborhood, it would lower the loan’s overall value to banks. That could, in turn, lead to a reluctance for lenders to grant loans that they can’t resell, which would include all loans issued in that neighborhood.

Appraisal-related discrimination

If your home appraises for much less than expected, you could lose significant money in a sale. The Act bans discrimination in appraising, which happens when appraisers — often inadvertantly — assign lower values to Black-owned homes than to white-owned homes.

Unfortunately, there has been some recent evidence that appraisal-related discrimination is still happening. The New York Times recently published an article about one couple’s experience having their home appraised in Jacksonville, Florida. The couple wanted to refinance their home. Based on nearby home value, they thought it should appraise at $450,000.

Instead, their appraisal came in at $300,000. The wife, who is Black and owns the home, requested another appraisal. In the meantime, she removed all family photos, all books by Black authors, and only left Christmas cards from white families on display. Her white husband greeted the second appraiser at the door. For round two, the home appraised at $465,000.

Appraisal discrimination is illegal, and one report in 2018 found that this devaluation still costs Black homeowners $156 billion in cumulative losses. This type of discrimination slows the growth of wealth in minority communities, preventing them from building equity and passing on that wealth to future generations.

Rental and sales discrimination

The Act also seeks to protect people from being discriminated against in the rental and sales market. Landlords cannot refuse to rent, and sellers cannot refuse to sell a house to someone based on the characteristics outlined in the FHA.

For example, if you’re making an offer on a house, the seller can’t refuse to negotiate the sale based on your race. They also can’t impose a different price or set different terms.

Landlords can’t make housing unavailable to certain people, either by setting different terms or conditions or imposing different prices. This could include requiring a larger security deposit from an Asian renter, charging a higher rent for a similar unit to a woman (or a man!), or having a stricter late fee policy for a disabled renter. If any of a landlord’s qualification or procedural criteria applies unequally, they could be engaging in illegal discriminatory behavior.

An example can be found in one recent lawsuit filed in Washington, D.C. The lawsuit alleges that, when talking with a prospective Black tenant, the landlord indicated a preference to rent to a white tenant. The landlord then failed to complete paperwork to help the Black tenant receive assistance with her security deposit, effectively preventing her from renting.

Landlords also can’t limit access to privileges, services, or facilities. The pool can’t be closed to one group during certain hours; landlords or property managers can’t limit access to the laundry room, and they can’t only offer reserved parking to certain individuals. Principles of fairness must apply.

These protections also extend to advertising and marketing a sale or rental. The home or apartment’s listing can’t have any indication of “preference, limitation, or discrimination” in its wording. (This includes social media ads.)

Agents have to be careful with a listing’s wording, which can’t discourage certain groups of people from purchase or rental. If a landlord says something like, “Oh, a nice single girl like you doesn’t want to live in that neighborhood,” this counts as steering a buyer away from an area, and it’s a violation of the law.

Further, agents who try to persuade homeowners to sell based on the fear that neighborhood demographics are changing, which is called “blockbusting,” could lose their license.

Finally, insurers must provide homeowners insurance to requesters, which can’t be issued or priced based on the FHA characteristics.

For landlords specifically

Special provisions address landlords specifically. Landlords cannot evict a tenant, or a tenant’s guest, based on FHA characteristics. They can still evict tenants, but it must be on the basis of non-payment or other lease violations.

Failing to make repairs, or delaying repairs, based on FHA characteristics is also illegal.

Bergquist thinks that many landlords misunderstand the provisions that protect a renter’s disability status. “Under the FHA, a person with a disability has a statutory right to request a physical modification to the home, assuming they have a disability-related need for it,” she says. In other words, a landlord may have a legal obligation to make repairs or to remodel to accommodate the tenant.

Even if they accept all applicants equally, landlords could inadvertently or deliberately engage in de facto segregation by assigning different groups of tenants to different buildings or sections within buildings.

For the industry at large

Harassment is illegal for everyone involved in the housing market, too! Agents cannot refuse to work with Black homebuyers. An agent who has strong religious beliefs cannot decline to show a house to someone of a different religion.

Brokerage organizations and multiple listing services (MLSs) are also prohibited from denying access to or membership based on race.

Are there exceptions?

There are some exceptions to the Fair Housing Act.

For sale by owner, or FSBO rentals and sales, do not have to comply with the Fair Housing Act’s rules. Housing operated by religious organizations is exempt, as are private clubs that limit occupancy.

Owner-occupied buildings with no more than four units do not have to follow the Act’s rules. If you’re sharing a building with a landlord — they can legally discriminate against you.

How is the act enforced?

The Department of Housing and Urban Development (HUD) investigates discrimination claims and acts if it finds that the law has been violated. HUD is investigating the case of the Jacksonville family’s lower appraisal referenced above.

HUD also hires people to pose as renters or buyers to test whether any laws are being broken. These tests include sending pairs of buyers and renters, usually comprising white folks and BIPOC, to the same real estate brokerages or rental homes, noting if they are treated differently.

HUD may also proactively pull data on home sales, mortgages, and lending practices in some neighborhoods to examine them for patterns that indicate discrimination. But HUD’s testing and oversight is not exactly widespread, and you should also be aware of how you can report violations if you suspect that you’ve been the subject of housing discrimination.

A computer used to report a violation of the Fair Housing Act.
Source: (Vishal Shanto / Unsplash)

What should you do if you think someone broke the law?

First, figure out what part of the law was broken and how.

Document your memories of the event — if a landlord or agent said something to you in-person — or keep copies of any emails or forms that support your belief that the law was broken.

Next, do some digging into any local or state fair housing watchdogs. You should report the violation to HUD — but occasionally when state or local watchdogs get enough information about widespread discrimination, they can also take action.

Lastly, you should file a complaint through HUD. HUD investigates complaints and helps enforce the law.

The Fair Housing Act and you

No matter your race, color, national origin, religion, sex, disability, or familial status — the Fair Housing Act protects you from receiving unfair treatment when you’re buying, renting, or selling a home.

Bergquist wishes that everyone knew there is no reason for property owners to discriminate. She points out that, “the factors that are most relevant—ability to pay and tenant history—are nondiscriminatory,” and “Landlords, home-sellers and agents

who use nondiscriminatory screening criteria, will have a larger market of qualified candidates for their property.”

Knowing your rights before you start home or apartment shopping helps you relax and enjoy the experience. Happy home shopping!

Header Image Source: (Clay Banks / Unsplash)

Laws exist to protect buyers, sellers, and renters from discrimination. You’re protected by the Fair Housing Act. But what is the Fair Housing Act?HomeLight Blog