2. Overview of Disparate Impact Claims Facially neutral policy or practice Adversely impacts a class protected by the Fair Housing Act Without a legitimate justification Despite the availability of less discriminatory alternatives

3. Two Kinds of Cases Pricing or denial cases challenging the treatment of applicants Policy cases challenging access to credit

4. Evidence of Pricing or Denial Disparities HMDA data publically available today HMDA data publically available under reforms Information available to HUD/DOJ o Additional HMDA fields & Federal Reserve outlier list o HAMP data o FHA loan data o HERA section 1128 data on interest rate disparities

5. Impact of Pricing and Denials Impact upon similarly-situated (similarly-credit-worthy) borrowers Underwriting factors may explain some disparities Impacts o U. S. v. AIG/WFI complaint: Alleges black borrowers charged total broker fees 20 basis points higher on average than white borrowers o HUD v. MortgageIT complaint: Alleges black and Hispanic borrowers charged APRs on average 6 to 14 basis points more and approximately $1000 more in fees than similarly-situated white borrowers o HUD v. Quicken Loans complaint: Alleges that, compared with similarly-situated white applicants, black applicants experienced 2% to 5% higher denial rates and Hispanic applicants experienced 2% to 4% higher denial rates

6. Impact of Policies Underwriting exclusions or limitations (e.g., row- houses, Native American lands) Lack of data on denials or borrowers subject to policies Census or other data on affected population

7. Legitimate Justification Lenders make decisions based on risk of default (safety & soundness) Requires proof Proof can’t be hypothetical or speculative

8. Less Discriminatory Alternatives Unlimited discretion may be addressed by guidelines and/or caps A lender’s later adoption of reforms may demonstrate available alternatives You need to understand the business in order to understand the alternatives

9. Contact information Tim Lambert HUD, Office of General Counsel Timothy.C.Lambert@hud.gov