At the beginning of September, the Ministry of Housing and Urban Development concluded a controversial interpretation of the different standards of effectiveness of the law on fair housing – with a twist.
The original proposal allowed a defendant to refute a plaintiff's case by relying on the use of an algorithm that was "non-discriminatory". Since HUD received several comments raising concerns about algorithms, some of which feared they might make lending discrimination worse than better, the specific reference to them was removed to refute claims.
Some consumer and civil rights advocacy groups admitted that the weakening of language on algorithms was to be welcomed, but remained concerned about the remaining language on the use of predictive analytics as it opens the door to the use of algorithms for defense fair living leaves open credit claims.
There was a split between larger and small lenders in terms of the HUD's changed interpretation of the differential impact. Bigger players like the Mortgage Bankers Association and Rock Holdings' Quicken Loans suggested postponing the change given the current national focus on racial stock issues. However, smaller lenders claimed that the associated regulation was unduly burdensome.
Many expect the incoming Biden government to repeal this change.