This document discusses the disparate impact theory, which prohibits policies that disproportionately and adversely impact protected classes. It summarizes that the theory is important because it brings life to fair housing acts, addresses unintentional discrimination, and combats systemic discrimination. The theory has been upheld by courts, enforced by HUD, and used by the Department of Justice to address issues like redlining, reverse redlining, discrimination, lending discrimination, and holding Wall Street accountable. The document outlines how to build a case using disparate impact theory and addresses issues and limits around its use.

1. Defending an Important Tool for Equal Housing
Opportunity: The Debate Over Disparate Impsct

2. Disparate Impact Theory
Michael D. Mitchell
April 19, 2012

3. Disparate Impact Theory
What is the Disparate Impact Theory?
Prohibits policies, practices &
procedures that have a
disproportionate, adverse and
disparate impact on people
because of their membership in a
protected class.

4. Disparate Impact Theory
Why is Disparate Impact Theory Important?
 Brings life to fair housing act
 Addresses unintentional acts of discrimination
 Way to address societal inequities
 Way to address big issues
 Way to combat systemic discrimination
 Similar affect to class action cases

5. Disparate Impact Theory
Acceptance of the Disparate Impact Theory
 Upheld by courts
 Enforced by HUD
 Subject of new HUD proposed regulation
 Utilized by Department of Justice

6. Disparate Impact Theory
Areas in Which Disparate Impact Theory has Been
Successfully Used
 Combatting redlining
 Combatting Reverse redlining
 Combatting discrimination against African
Americans, Latinos, people with disabilities
 Insurance cases
 Lending cases
 Holding Wall Street accountable
 Rating Agencies
 Servicers

7. Disparate Impact Theory
Issues
• Restrictive minimum values
• Restrictive loan amounts
• Geographic restrictions
• Property type restrictions
• Credit overlays

8. Disparate Impact Theory
Anatomy of a Case:
• Identify policy with disparate impact
• Build a case that is:
• Sophisticated
• Overwhelming
• Solid
• Case must be supported with Data
Mapping makes it clear!

9. Disparate Impact Theory
Anticipated Business Defenses
• What are the business justifications for the policy?
• Are they legitimate?
• Are there better ways to achieve their legitimate
business interest?
• Identify less onerous alternatives
• Identify the win-win

10. Disparate Impact Theory
Limits on Disparate Impact
• In America, most policies have a disparate impact
• We must avoid making bad case law
• Theory to be used judiciously
• Not a time for recklessness
• Cases brought must be Reasonable
• Test your case on your colleagues before you file

11. Disparate Impact Theory
Issues to Be Addressed
• Credit scoring
• Access to credit
• Servicing issues
• Foreclosure issues

12. Disparate Impact Theory
Future of Disparate Impact
Theory under attack
• Case law
• Magner v. Gallagher
Disparate Impact Theory
is here to stay!
Theory being strengthened
• New HUD regulation