The fresh new rules and you may Group Statements implementing ECOA in addition to explicitly ban unjustified discriminatory consequences

HUD Response: HUD will not believe that this new laws gets a beneficial chilling effect on lending when you look at the lower income communities otherwise that it’ll remind lawsuits difficult credit scores, other credit assessment criteria, or even the standards of your own Dodd-Honest Work. As the talked about above, the latest code will not alter the substantive laws; eleven government courts from is attractive enjoys acknowledged discriminatory outcomes accountability lower than brand new Work as well as over recent years process of law keeps examined each other meritorious and you can low-meritorious discriminatory consequences says tricky credit methods. Since HUD has actually reiterated, the new laws formalizes good substantive legal basic that is well known because of the one another process of law and you will participants throughout the financing world to have evaluating claims out of discriminatory outcomes. Actually, in the credit context, about since issuance of your own Mutual Plan Report nearly 18 years ago, non-depository lenders, banking companies, thrifts, and borrowing unions have been to your notice that government regulating and you will administration enterprises, including HUD while the Company away from Fairness, inations and testing significantly less than the Reasonable Casing Operate and ECOA. Therefore, none a chilling perception nor a great deal of new litigation can also be be anticipated due to this rule. In fact, lender compliance is be a bit convenient due to the rule’s obvious and you may in the united states uniform allocation out of burdens and you may clarification of the showings both parties need to build.

Issue: Certain commenters expressed question you to definitely confronted with the brand new threat of different impression responsibility, lenders you’ll extend borrowing from the bank so you’re able to members of minority communities that do perhaps not be eligible for the financing.

Almost every other commenters shown concern with potential responsibility to have directors of the government Low income Housing Taxation Credit (LIHTC) program

HUD Response: New Reasonable Housing Work does not require lenders to increase borrowing to persons perhaps not or even eligible for that loan. Due to the fact discussed prior to now, the very last rule formalizes a fundamental away from liability under the Work that has been essentially for a long time. HUD try unaware of people lender receive liable in discriminatory effects fundamental having failing continually to generate financing to help you an associate from a fraction category which don’t fulfill legitimate nondiscriminatory credit qualifications.

Issue: Another commenters shown something you to discriminatory outcomes responsibility you will has a good chilling effect on jobs built to uphold otherwise create reasonable casing, along with pursuant to HUD’s individual software, because much of current affordable houses stock is found in aspects of minority focus. A good commenter stated that tips designed to secure the growth of sensible casing might be “deflect[ed]” away to respond to says of different impact discrimination. Another commenter expected one to HUD topic guidance on the affordable houses business because they provide HUD applications.

These commenters reasoned that the concentration of reasonable houses stock from inside the low-income areas, in addition to federal conditions and you can incentives which encourage the implementation out-of tax credits inside the reasonable-money teams, can lead to discriminatory consequences liability getting companies administering the newest LIHTC system. Numerous commenters questioned HUD to help you identify regarding finally laws that this new mere recognition out-of LIHTC ideas for the minority elements by yourself does perhaps not introduce a prima facie case of disparate feeling beneath the Act otherwise one to finding LIHTC tactics in the reasonable-income portion is a legitimately enough justification so you’re able to says out-of disparate impact discrimination.

An effective commenter asked that HUD render pointers so you can for example companies

HUD Impulse: HUD doesn’t anticipate the final signal for a good chilling effect on the growth and conservation off sensible homes once the, just like the chatted about over, the fresh rule does not present a different sort of kind of accountability, but alternatively suits to formalize because of the controls a standard who may have come used by the HUD while the process of law for many years, whenever you are delivering nationwide uniformity of app. The fresh new signal does not mandate you to definitely reasonable housing be found during the areas with people particular characteristic, however, demands, due to the fact Reasonable Casing Operate currently do, just one casing invention factors n’t have an enthusiastic unjustified discriminatory effect.

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