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Department of Housing and Urban Development

DEFINITION

California Agency tasked with creating and enforcing fair housing laws. One of the major goals of HUD is to promote affordable housing and to ensure all residents are treated equally with regard to the buying and selling of real estate.

EXPLANATION

The Department of Housing and Urban Development (HUD) is the federal agency tasked with implementing and enforcing The Fair Housing Act and its provisions. HUD’s mission is to:

“build inclusive and sustainable communities free from discrimination”,

“strengthen the housing market to bolster the economy and protect consumers”, and

“utilize housing as a platform for improving quality of life”.

The main reason for HUD’s creation  is to promote quality affordable housing with the intent of strengthening the housing market to promote growth in the economy. While the intent behind HUD remains the same as it did when it was initially created, many new goals have arose. These include promoting affordable by working with Fannie Mae and Freddie Mac to provide loans to borrowers and working with lenders to create low down payment mortgage programs to assist “first time homeowners” and the elderly to purchase and maintain their properties.

HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all.

History of HUD

To respond to the growing threat that the Great Depression caused, government officials created the National Housing Act in 1934. Within the newly passed bill lay new fundamental changes which would forever change the course of the American housing market.

New departments were created, such as the Federal Housing Administration (FHA), Department of Housing and Urban Development (HUD), and others with the intent of stabilizing the real estate market in periods of growth and decline. Additionally, the goal of both the FHA and HUD is to incentivize the housing market by bringing in consumers who may otherwise had a challenging time getting qualified into the housing market. This opened the door for many renters, first time home buyers, and younger people.

Protecting Consumer Rights is One of the Main Goals of the Housing and Urban Development

The passage of the original Fair Housing Act in 1968 instituted new changes to the processes of selling, leasing, and transferring real estate. The act made it illegal for landlords and sellers to discriminate based on race, gender, age, religion, disability or affiliation. The Department of Housing and Urban Development (HUD) led the way with Unruh by taking on a greater role by passing the Fair Housing Amendment Act of 1988. The Fair Housing Amendment Act of 1988 prevents discrimination on the basis of family size, including the number of children present, and disability status. The passage of this amendment gave more governing power to HUD, which was then given the responsibility of facilitating investigations and initiating complaints regarding allegedly illegal sale or lease of property.

Lenders who sells federally backed mortgage must provide a copy of the Special Information Booklet provided by the Department of Housing and Urban Development to the borrower. This booklet provides information relating to mortgages, costs associated with borrowing, the risk of borrowing, and provides general advice regarding mortgages.

Equal Housing Opportunity Violations

The Department of Housing and Urban Development (HUD) requires every real estate licensee to post an equal housing opportunity poster at his or her business. This poster states that housing discrimination is illegal, and also offers a point of contact for complaints about housing violations.

A violated party may file a complaint directly with the Department of Justice, or with HUD’s Office of Fair Housing and Equal Opportunity (FHEO). The FHEO will then investigate whether the violation actually violates the Fair Housing Act. If it does, the FHEO will refer the case to the proper legal authorities.

If a judge also determines that a violation exists, he or she will determine the penalty for such a violation. If a defendant is found guilty of a housing violation, he or she may be liable for a fine between $10,000-$50,000.

A violated party has up to a year to bring a complaint to HUD. If a complaint is not taken to HUD, a plaintiff has up to two years to take legal action against a violator in a state or federal court.

Case Law As It Relates to HUD Violations

Case Review: Taylor v. Rancho Santa Barbara (2000)

The case, Taylor v. Rancho Santa Barbara (2000) 206 F.3d 932., involved a mobile home owner who was denied entry to a mobile home park because of his age.

Mobile home owner, Taylor, was 41 years old when he was denied entry into a Santa Barbara mobile home park for senior citizens and individuals over the age of 55. Taylor brought legal action against the city of Santa Barbara.

Taylor argued that the mobile home park’s age restrictions violated the Equal Protection Clause of both the 5th and 14th Amendments. The Superior Court ruled against Taylor. He appealed.

The appellate court affirmed the lower court’s ruling. The court held that an age restriction was not a violation of state and federal law as such measures were created to protect senior citizens and older individuals who rely on affordable housing.

Case Review: Giebeler v. M & B Associates (2003)

The case, Giebeler v. M & B Associates (2003) 343 F.3d 1143., featured an HIV-positive tenant who was denied tenancy in a building.

The tenant, Giebeler, worked as a technician and earned about $36,000. When he was diagnosed as HIV positive, Giebeler could no longer work. He was forced to rely on social security and housing income from an AIDS fund.

When Giebeler applied for tenancy in a building, the landlord denied his application on the grounds that he did not qualify for the income requirement. Giebeler had his mother — who had significant income and a perfect credit history — co-sign on the application and re-submitted it to the landlord. The landlord denied that application as well, indicating that he did not allow co-signers.

Upon getting the second application denial, Giebeler contacted the AIDS Legal Services for assistance. The organization drafted a letter to the landlord, contending that the landlord was legally required to make reasonable accommodations for Giebeler’s disability (in this case, by waiving his no co-signers policy). The landlord did not change his decision.

In response, Giebeler filed an action with the Federal Housing Administration (FHA), citing the California Fair Employment and Housing Act (FEHA). He argued that the landlord had employed intentional discrimination against him by failing to reasonably accommodate his disability.

The U.S. District Court ruled in favor of the landlord. Giebeler appealed and the Court of Appeals ruled in his favor. The appellate court held that HIV qualifies as a physical impairment for the purposes of the Fair Housing Amendments Act. Therefore, the landlord was required to reasonably accommodate Giebeler by allowing him to use a co-signer, as such an accommodation did not place an undue hardship on the landlord. Consequently, the landlord was required to lease a unit to Giebeler.

Case Review: Auburn Woods I Homeowners Association v. Fair Employment and Housing Commission (2004)

The case, Auburn Woods I Homeowners Association v. Fair Employment and Housing Commission (2004), 121 Cal.4th 1578., involved condominium owners suffering from depression who were prevented from owning a dog by their homeowners association.

The condominium owners — who were a married couple — both suffered from severe depression. The couple claimed that taking care of a dog alleviated the symptoms of their condition. The condominium owners petitioned their homeowners association (Auburn Woods) to allow them to keep the small dog. Auburn Woods refused, claiming that the condominium owners did not suffer from a physical disability and that the dog provided no real service to their condition.

The condominium owners filed a claim with the Fair Employment and Housing Commission (FEHC). The Commission ruled in favor of the condominium owners. In response, Auburn Woods filed a petition for a writ of mandate (a formal written command) to overturn the FEHC decision. A trial court overturned the FEHC decision. The condominium owners and the FEHC appealed.

The Court of Appeals reversed the lower court’s ruling. The court contended that emotional disabilities were comparable to physical disabilities under the law. Therefore, the condominium owners’ depression was considered a disability, and it was unlawful for Auburn Woods to refuse them reasonable accommodations for their condition.

Case Review: Fair Housing Council of Orange County, Inc. v. Ayres (1994)

The case, Fair Housing Council of Orange County, Inc. v. Ayres (1994) 855 F.Supp. 315., involved married tenants who were forced by their landlord to vacate their apartment due to the size of their family.

A married couple were tenants in an apartment building that had a maximum two person per unit occupancy rule. When the wife became pregnant and gave birth to a son, the landlord (Ayres) told the tenants that they would have to vacate the apartment. Ayres argued that having three occupants in the unit was a violation of the building’s occupancy rule.

The tenants filed a complaint with the Fair Housing Council of Orange County on the grounds of familial status discrimination. The tenants alleged that Ayres was in violation of the Federal Housing Act and California’s Unruh Act. The Council brought the case to a District Court.

In court, Ayres contended that his maximum two person per unit occupancy rule was a business practice and, therefore, it was justified. The District Court did not agree. It argued that Ayres could not prove that this occupancy rule was the least restrictive means through which to achieve his business goals. The Court held that alternative methods — such as enforcing higher security deposits or adding additional inspections of units — could accomplish the same goals without being so restrictive.

Consequently, the Court ruled that the landlord’s occupancy rule unfairly discriminated against families with children and was therefore in violation of state and federal law.

Case Review: Pfaff v. U.S. Department of Housing and Urban Renewal (1996)

The case, Pfaff v. U.S. Department of Housing and Urban Renewal (1996) 88 F.3d 780., involved a family whose tenant application was denied by a landlord due to the family’s size.

A family of five submitted a tenant application for a two-bedroom, 1,200-square foot property. The property’s landlord (Pfaff) denied the application on the basis that having more than four people in the unit would dramatically reduce the value of the unit due to an increased usage rate. The family was then forced to rent an alternative apartment, a process that it claimed was fraught with inconvenience and financial hardship.

The family filed a complaint with the Department of Housing and Urban Development (HUD) against Pfaff, alleging violations of the Fair Housing Act and the Fair Housing Amendments Act of 1988 in regards to familial status. The case was initially brought before an administrative law judge, who ruled in favor of the family. It awarded them $4,212 in damages and $20,000 in emotional distress claims, and demanded a $8,000 civil penalty of Pfaff.

Pfaff appealed, and the Court of Appeals overturned the administrative law judge’s decision. The appellate court argued that HUD’s occupancy guidelines were broad and unclear, a fact which made it difficult to ascertain whether an occupancy limit was reasonable or discriminatory. This lack of legal clarity, it argued, made it unfair to punish Pfaff for its decision to deny the family’s tenant application.

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