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Supreme Court grants cert (again) in FHA disparate impact case

Posted in Fair Lending

Second time’s the charm?  For the second time in less than two years, the U.S. Supreme Court granted certiorari today in a case that presents the question whether plaintiffs suing under the Fair Housing Act  (FHA) may bring disparate impact claims.  

Today’s grant of certiorari was in Mount Holly v. Mount Holly Gardens Citizens in Action, Inc., which concerns a New Jersey township’s plan to redevelop a blighted residential area occupied predominantly by low- and moderate-income minority households.  The justices were poised to decide the FHA disparate impact question last year in Magner v. Gallagher, but the case disappeared from the Court’s docket just a few weeks before its scheduled oral argument on February 29, 2012, when the City of Saint Paul dismissed its appeal. 

As we have noted in our ongoing reports on Mt. Holly, the CFPB has taken the position that a violation of the Equal Credit Opportunity Act (ECOA) and Regulation B (which apply to all types of credit, not just mortgage lending) can also be established through evidence of disparate impact.  Since both the FHA and ECOA lack textual support for use of a disparate impact test, if Mt. Holly, unlike Magner, goes the distance, the Supreme Court’s ultimate ruling will have significant implications for the validity of the CFPB’s position.  Ballard Spahr is representing one of the defendants in the case.

For more on today’s grant of certiorari in Mt. Holly, see our legal alert.