Safe harbor for CUs would strengthen ‘disparate impact’ rule

August 24, 2021

CUNA applauds the Department of Housing and Urban Development (HUD) for providing clarity and consistency by ensuring there is a codified discriminatory effects standard, but urges it to offer a safe harbor for policies directly required by statutory obligations, such as credit union field of membership limitations.

This year HUD proposed to reinstate a 2013 final rule adopting a long-standing three-step burden shifting approach for determining violations of the Fair Housing Act’s (FHA) Discriminatory Effects Standard.

“Credit unions support the goals of the FHA to prohibit discrimination in our housing finance sector and to ensure fair housing access to all Americans in our country,” the letter reads. “CUNA further supports the codification of a discriminatory effects standard. Credit unions have long been aware that policies that create a disparate impact on a protected group of members or potential members may be in violation of the FHA.

CUNA notes that as a result, credit unions are careful to draft policies and procedures that comply with FHA regulations, but codifying a single, authoritative standard for disparate impact claims simplifies this analysis and creates a consistent level of protections across the country.

“CUNA also urges HUD to include in its framework an explicit safe harbor for policies which are the direct result of “facially neutral statutory obligations” such as credit union field of membership requirements. NCUA made a similar ask during the 2013 rulemaking process.

“CUNA would similarly urge HUD to explicitly mention credit union field of membership limitations as an illustrative example of a statutory limitation satisfying the safe harbor,” the letter reads.