Equal opportunity housing: What you need to know

While searching for a house to buy and ultimately making an offer on a house of your choosing should be a time filled mainly with great excitement and anticipation, this isn’t always the case.

Sometimes, prospective buyers face discrimination based on any number of factors – and when this occurs, a buyer needs to be assured they’re going to get a fair chance at purchasing the house they’ve fallen for.

With this in mind, let’s explore the important topic of equal opportunity housing, while highlighting the responsibilities of all parties in a real estate transaction and the steps you should take if you suspect you’re being discriminated against.

What does equal housing opportunity mean?

Equal opportunity housing (sometimes referred to as “equal housing opportunity”) means that everyone has an equal right to be judged fairly in financing decisions related to housing. Under these laws, you also have a right to rent property wherever you want, as long as you can make your payments and there’s availability.

Who is protected by equal opportunity housing laws?

As part of various pieces of legislation aimed at creating equal housing opportunity, home buyers can’t be discriminated against on the basis of any of these characteristics:

• Race
• Creed
• Color
• National origin
• Sexual orientation
• Military status
• Age
• Gender
• Marital status
• Disability
• Religion
• Familial status
• Whether any part of their income comes from public assistance programs, such as Social Security or Supplemental Security Income
• Whether an applicant for a mortgage or rental assistance has exercised any of their rights under the Consumer Credit Protection Act of 1968 or similar state laws

Despite these factors being prohibited from use in housing and lending decisions, parties sometimes run afoul of these laws and regulations – either intentionally or subconsciously.

Who enforces equal housing opportunity laws?

The Department of Housing and Urban Development (HUD) regulates issues of discrimination in housing. The department has an Office of Fair Housing and Equal Opportunity (FHEO). Consumers can also file complaints and seek relief through state and local agencies.

In 2021, HUD and the Federal Housing Finance Agency (FHFA) entered into a memorandum of understanding in which they pledged to work to enforce the Fair Housing Act. In this same memorandum, they restated their commitment to fighting discrimination in the home buying process.

HUD is primarily responsible for enforcing fair housing laws. The FHFA oversees and regulates Fannie Mae and Freddie Mac, the government-sponsored enterprises responsible for ensuring housing market liquidity.

How to identify real estate companies that support equal housing

HUD provides a logo that certified lenders can use to show that they’re committed to equal housing opportunities. Look for a house icon with “=” in the middle, as shown here:

Rocket Mortgage^® has this logo displayed on our website to show our commitment to equal opportunity housing for all. You may find it in other places, too, depending on the website design of the organization or entity you’re working with. We are committed to equal opportunity housing for all.

You can also assess a real estate company’s stance on equal housing opportunities by looking for the words “equal housing lender.” This can be in a logo or disclaimer text in a commercial or advertisement.

Equal housing opportunity and rentals

Discrimination is also prohibited – in most cases – in the rental process. However, discrimination is in rare cases exempted from the Fair Housing Act, and thus can occur without legal consequences, if one of the following situations applies:

• A building is owner-occupied and features four or fewer units
•  A single-family house is being offered for sale by owner, or for rent, without the assistance of a real estate agent or broker
• Housing is managed by private clubs or religious organizations and limited to buyers with membership in those groups

In most circumstances, the prohibition against racial discrimination applies even when an individual or entity is otherwise exempt from the act. For example, religions and private clubs can’t deny someone housing on the basis of race, color or national origin. Consider consulting an attorney to understand your rights in these situations.

Equal housing opportunity and home sales

Various forms of discrimination can take place during the home buying process. Fair housing rights are for the protection of buyers, with responsibilities for the sellers, appraisers and real estate agents involved in a home transaction. Let’s walk through some of these rights and responsibilities.

Rights of the home buyer

If you’re a home buyer, no one can legally discriminate for or against you based on any of the above protected attributes. This means you should be able to buy or rent a home anywhere houses are available, without being discriminated against.

From a lending perspective, you can only be judged based on objective characteristics of your finances to determine whether you qualify. These could include your credit score, credit history, income and assets you have available for qualification. Lenders aren’t supposed to judge you based on whether the income comes from public assistance.

Additionally, some special laws may apply based on your individual situation. We’ll get into a few of these later on.

Responsibilities of the home seller

As a home seller, you have to fairly entertain offers from everyone who might want to buy your home. You can’t make decisions for or against someone based on any of the categories mentioned above.

This doesn’t mean you can’t have some criteria for those you sell your home to. If it’s based on a financial qualification characteristic, such as being preapproved so the transaction goes smoother, that’s okay. But what’s not okay?

Let’s say you’re selling your home and would prefer to sell to a single person without children, because your neighbor is older and sensitive to a lot of noise. Although your intentions might be noble in that you’re being mindful of your neighbor’s feelings, selling only to this one demographic is also not something you can legally do – because familial status is a protected characteristic.

Someone selling or refinancing their home also has certain rights, including the right to a fair home valuation. That’s where appraisers come in.

Responsibilities of the appraiser

When you buy or refinance a home, a home valuation determines the home’s worth. Because the home serves as collateral for the loan, lenders won’t loan you more than the home is worth. Appraisers evaluate the condition of your home and give it a value based on recent sales of similar homes in your area.

In practice, the way this works is that if you have a three-bedroom ranch, your home is compared to recent sales of other three-bedroom ranches in your area – typically within a mile of yours, depending on the population density in your area.

Although the problem isn’t likely widespread, incidents of bias do happen on occasion. We’ll go over what sellers can do about the potential discrimination later on.

Responsibilities of the real estate agent

If you’re a real estate agent, you’re also bound by these rules of nondiscrimination. For example, you aren’t legally allowed to avoid showing buyers certain areas because you believe residents of the neighborhood might not be welcoming of their sexual orientation. Neither are you allowed to serve only particular races of people.

If a buyer wants to look within a certain area, you have to show them the properties that are available. If they decide to make an offer, you must negotiate on their behalf.

The laws guaranteeing equal opportunities in housing

While we’ve covered the basics of what your rights are as a home buyer or seller, it’s important to note that rights are nothing without the force of law behind them. With that in mind, let’s examine several key pieces of civil rights legislation and how they impact homeownership.

Civil Rights Act of 1866

The earliest known federal legislation in this area was the Civil Rights Act of 1866. Passed during the Reconstruction era after the Civil War over a veto by President Andrew Johnson, it declared that all people born in the United States were U.S. citizens with all the rights of citizenship. Importantly, these rights included the ability to own property.

Title VI of the Civil Rights Act of 1964

Title VI of the Civil Rights Act of 1964 prohibited discrimination among entities that receive federal funding. This was important from a housing perspective because it established that – legally speaking – discrimination would no longer be tolerated and, in fact, be punishable for offending providers of public housing.

Fair Housing Act

The Fair Housing Act prohibits discrimination in housing on the basis of race, color, national origin, religion, sex, familial status or disability.

Among the actions prohibited on the basis of these characteristics is refusing to rent or sell housing, and refusing to negotiate. You also can’t set different terms and conditions for sale or rental, or provide separate facilities. Lenders can’t charge different interest rates or qualification standards, and sellers can’t have different sale prices on the basis of a protected class.

Equal Credit Opportunity Act

The Equal Credit Opportunity Act prohibits discrimination in credit and lending decisions on the basis of race, color, religion, sex, national origin, marital status, age or if you receive public assistance income.

Creditors can’t discourage you from applying based on these factors or consider them in taking your application. If you’re applying jointly or live in a community property state, they can ask about your spouse. Otherwise, that’s restricted. They also can’t give you different terms based on a protected characteristic.

Lenders may ask you about many of the characteristics above, but only as part of compliance monitoring associated with anti-discrimination laws. You’re not required to answer.

Consumer Credit Protection Act of 1968

Under the Consumer Credit Protection Act of 1968, lenders and creditors are required to disclose credit terms to consumers. Consumers are also protected from the actions of loan sharks, and garnishing wages is subject to restriction. This act is enforced jointly by the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC). The National Commission on Consumer Finance was also established to regulate the industry.

Americans with Disabilities Act

Together with Section 504 of the Rehabilitation Act of 1973 and the Fair Housing Act, the Americans with Disabilities Act (ADA), enforced by the Civil Rights Division of the U.S. Department of Justice, applies to most private housing as well as public housing. It prohibits discrimination on the basis of disability.

Here are some examples of items provided for under this act:

• Any privately owned or publicly held multifamily complex having its first occupancy after March 13, 1991, must meet design and construction standards for use by the disabled. These standards include accessible routes into and out of first-floor units (or all units in a building with elevators).
• Such accessible units need a usable kitchen and bathroom. This includes reinforcements for grab bars in the bathroom.
• Accessible outlets, thermostats and switches are required.Housing providers are required to make reasonable accommodations for qualified assistance animals.

HUD has more information on disability-related housing rights.

Home Mortgage Disclosure Act

The Home Mortgage Disclosure Act, enforced by the CFPB, requires lenders to report certain data specific to:

• Home purchases
• Preapprovals to purchase
• Home improvement
• Home refinance applications

This takes into account the areas in which a lender is making loans. It also looks at various pieces of information covered by the protected classes discussed earlier – with the goal of identifying potential lending discrimination, whether communities are being appropriately served and whether opportunities exist for investment in underserved communities.

Section 1031 of Dodd-Frank Wall Street Reform and Consumer Protection Act

More commonly known as UDAAP, this law prohibits unfair, deceptive or abusive acts or practices that take advantage of people in various ways, which include making it hard or impossible for them to understand a product or service. Section 1031 of Dodd-Frank is enforced by the CFPB.

Compliance with this law in the mortgage business means that lenders have to have clear and present disclosures of any terms associated with offers. It’s also why you’ll see both a base interest rate and an annual percentage rate (APR) printed next to each other in advertisements.

New York State Human Rights Law

Laws concerning financial regulation don’t all come from the federal government. One of the most visible state laws is the Human Rights Law, passed by the state of New York in 1965. This codifies in state law many of the same rights protected under the Federal Housing Act that was later passed in 1968.

The Human Rights Law and other laws similar to it give states enforcement authority over housing discrimination actions. Mortgage lenders and brokers also are licensed at the state level, enabling states to have a level of oversight.

If you think you’ve been discriminated against in a housing situation in New York, you can file a complaint with the New York Division of Human Rights. You might also want to contact Housing Opportunities Made Equal (HOME), a civil rights advocacy group that works to ensure equal housing opportunities.

What to do if you’re a victim of housing discrimination

Now that you know your rights under various fair housing laws, here’s what you can do if you believe you’re facing housing discrimination.

• Try to work it out with the offending party. No company, home seller or landlord wants a bad reputation. Also, in many instances, they may be unaware of what’s going on or fail to realize that they’re being discriminatory.
• Take notes. The more detailed you can be in your description of your experience, the more it will help the people who may actually be able to take action based on your complaint. It’ll provide the information needed to dig in and see what’s happening.
• Challenge an appraisal. The appraisal must be challenged by your lender, who will evaluate the appraisal and your supporting documentation explaining why you think it’s wrong. In the event the appraisal raises concerns, another appraiser can come out and conduct a new appraisal.
• Consult an attorney. If you think your situation rises to the level that you would consider filing a lawsuit, you might speak with an attorney for advice on the best ways to potentially pursue legal action.
• File a complaint. Figure out which agencies or oversight boards have authority over the entity you’re having trouble with. The agency will review your complaint and launch an investigation, if needed.

The bottom line

Equal opportunity housing laws protect people from discrimination when buying or renting a property. The goal of these laws is to ensure everyone has equal access to housing regardless of race, gender, nationality, disability or other buyer characteristics.

If you think you’ve been discriminated against, you should file a complaint with HUD and your state’s attorney general.

Looking for an equal housing opportunity company you can trust? Complete an application with Rocket Mortgage and get started on the mortgage process today. You can also give us a call at (833) 326-6018.