By Kevin Wack

February 11, 2013

The release of a long-awaited federal rule on housing discrimination is bad news for bankers who fear being targeted in fair-lending suits, according to lawyers who represent the defendants in those cases.

TheĀ 83-page rule, which was issued Friday by the Department of Housing and Urban Development, will likely make it easier for borrowers to win disputes over allegations of racial discrimination. Moreover, it could reduce the likelihood that the Supreme Court would side with banks in fair-lending cases, lawyers say.

The HUD rule codifies the longstanding view of federal agencies that fair-lending cases may be brought when lending policies have a “disparate impact” on minority groups, even if there is no evidence of any intent to discriminate. It is being hailed by housing advocates, who argue that discrimination claims should be subject to a lower standard of proof than the one favored by banks.

“We’re happy that the rule’s out, and believe it’s consistent with 40 years of policy,” says Dory Rand, president of the Woodstock Institute, a nonprofit advocacy group.

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