We’ve tracked (especially by way of the Westchester County, N.Y. controversy) the ambitious efforts of the federal Department of Housing and Urban Development to grab more control over local governments’ zoning and project building decisions, in part through a proposed new “AFFH” rule (Affirmatively Furthering Fair Housing). Now the House has voted an appropriations rider cutting off funds for implementation of the new rule. [sponsor Rep. Paul Gosar (R-Ariz.), Paul Mirengoff/PowerLine, Sara Rankin/Legislation Prof (opposed), National Low-Income Housing Coalition, earlier on AFFH and on housing discrimination law generally]
- Truly awful proposal: “2014 HB 366 proposes to prohibit landlords from refusing housing vouchers” [Maryland Legislative Watch, earlier from other states]
- SB 409/HB1197 (Raskin/Hixson) would require restaurants to have at least one staffer on premises at all times with state-accredited training available to discuss food allergies with customers [MdLegWatch]
- House of Delegates panel passes O’Malley’s steep minimum wage hike, though with some amendments [AP, WaPo]
- Sunlight on one of the most dangerous law enforcement practices: SB 468 (Shank) would require state and local agencies to report on asset seizures/forfeitures [Maryland Legislative Watch, Baltimore Sun]
- HB 1253 would empower existing hospice operators to block new competitors through tightened certificate-of-need (CON) regulation [Legiscan, Del. Michael Smigiel, Marc Kilmer/Maryland Public Policy Institute].
- Steep hike in cigarette tax: thank heavens no one’s figured out how to smuggle contraband along I-95, I-70 or we might have trouble [J.D. Tuccille, Reason]
- I spoke Thursday in College Park at a panel on marijuana legalization sponsored by Students for Sensible Drug Policy with panelists Neill Franklin of Law Enforcement Against Prohibition, Toni Holness of the ACLU of Maryland, and Eric Sterling of the Criminal Justice Policy Foundation, moderated by Rachelle Yeung of the Marijuana Policy Project. I discussed Cato’s 2010 study by Jeffrey Miron and Katherine Waldock, “The Budgetary Impact of Ending Drug Prohibition“.
A group called the National Fair Housing Alliance has taken the lead in levying sensational bias charges against mortgage lenders, claiming that neglect of REO (real-estate-owned) properties following foreclosure has followed racially discriminatory patterns. It helped negotiate the extraction of $42 million from Wells Fargo, and is pursuing tens of millions in claims against Bank of America and other lenders. NFHA’s claims have routinely been given unskeptical circulation in the press, but now an investigation by Kate Berry and Jeff Horwitz in the American Banker is bringing overdue scrutiny:
The group has disclosed addresses for only a fraction of the properties it alleges the banks have neglected, but a review of those it has released indicates that NFHA regularly misidentified the institution legally responsible for maintaining specific homes. In some cases, it conflated the banks responsible for maintaining properties with those that were simply serving as trustees for mortgage-bond investors. In others, it faulted banks for damage that occurred before they took possession of properties.
Not in dispute is the leverage the NFHA has gained in its dealings with banks from its close ties to supporters in the federal government. Unusual among Washington agencies, the Department of Housing and Urban Development both funds housing discrimination investigations by nonprofits, including by the NFHA, and provides the venue for them to negotiate their claims.
Grants from HUD and Fannie Mae helped get the NFHA and its leader, Shanna Smith, into the profitable business of investigations in the first place. Banks complain without success about Smith’s practice of demanding a deal while withholding the actual identities and addresses of the properties said to be suffering from bank neglect. Now the HUD-brokered Wells Fargo settlement has paid off richly with $30 million+ for the NFHA and its affiliates, the better with which to stir up more complaints. And watch the revolving door spin, amid few qualms arising from conflicts of interest: “Sara Pratt, the HUD official responsible for investigating and resolving the NFHA’s complaints, and who oversaw its settlement with Wells Fargo, is a former NFHA staffer and consultant.” (cross-posted at Cato at Liberty).
It looks as if someone really doesn’t want the Obama administration’s treasured but shaky “housing disparate impact” theory to come under review by the Supreme Court [Josh Blackman on reports of settlement mooting Mount Holly, N.J. case granted certiorari and pending before the Court; earlier on controversial tactics used to moot St. Paul case through settlement]
More: Piscataway v. Taxman also dropped off the Court’s docket via a mootness tactic. And shorter Doug Kendall/Constitutional Accountability Center: how dare PLF, Cato and IJ take the Court’s word on what the issue is in Mt. Holly? [Ilya Shapiro]
- “Dodd-Frank and The Regulatory Burden on Smaller Banks” [Todd Zywicki]
- Side-stepping Morrison: way found for foreign-cubed claims to get into federal court? [D&O Diary]
- “Alice in Wonderland Has Nothing on Section 518 of the New York General Business Law” [Eugene Volokh, swipe fees]
- “Financial Reform in 12 Minutes” [John Cochrane]
- Why the state-owned Bank of North Dakota isn’t a model for much of anything [Mark Calabria, New York Times “Room for Debate”]
- Regulated lenders have many reasons to watch SCOTUS’s upcoming Mount Holly case on housing disparate impact [Kevin Funnell]
- Cert petition: “Time to undo fraud-on-the-market presumption in securities class actions?” [Alison Frankel]
- More regulation of online speech: what could go wrong? “‘Eraser’ law gives California teens the right to delete online posts” [ABA Journal, Eric Goldman, Scott Greenfield]
- Gov. Brown signs bill to grant law licenses in California to illegal immigrants [Reuters]
- “Court: website alleging police corruption shouldn’t have been shut down” [Ars Technica; Lafayette, Louisiana]
- License to speak: Eugene Volokh and Cato Institute challenge licensing of DC tour guides;
- Thanks to Keith Lee at Associates Mind for including us in list of recommended law sites;
- St. Paul disparate-impact housing controversy: “How Mischievous Obama Administration Officials Scuttled An Important Supreme Court Case” [Trevor Burrus, see also]
- Great circle of tax-funded life: public sector lobbying expenditures [Washington state via Tyler Cowen]
- Drunk driver leaves road, hits power pole, Washington high court allows suit against property owner to proceed [Lowman v. Wilbur, PDF]
- State attorneys general pressure clothing maker to drop t-shirts with drug names [ABA Journal, related earlier]
- More transparency needed in Child Protective Services [Reason TV] One lawyer’s critique of CPS [Laurel Dietz, Straight (Vancouver)]
- While aspiring to nudge us into more farsighted financial practices, government has trouble staying out of dumb bond deals itself [Coyote, and more (Detroit)]
- You can care about safety but still think some speed limits are set too low [Canadian video on Jalopnik]
- Trial lawyers aim to extend to Indiana their Idaho victory over “Baseball Rule” on spectator liability [NWIT, earlier here, here, here, etc.]
- New “fair-housing” assessment and planning process propels federal government into social engineering [IBD editorial via AEI Ideas, HUD]
A video from the humor site The Chive has been making the rounds with a landlord’s narration of the ghastly extent of damage to a family home done by a single really bad tenant participating in the federal Section 8 housing-voucher program (and not responsible for most of the rent). Some landlords might react to such an experience by becoming more wary of Section 8 tenants and subjecting them to extra screening or interviewing, while others might be more convinced by assurances (from various quarters supportive of the Section 8 program) that horror stories are in no way typical and that tenants using the vouchers are no more likely to trash a property than any other tenants.
Such a difference of opinion might be of relatively limited interest — some landlords could follow one strategy, others the opposite, and experience would tell which was the more successful — except that the Obama administration and its allies are taking the position that “discrimination” against Section 8 tenants, whether in the form of extra scrutiny of their applications, turning them away as applicants, or anything else, should be illegal. That is one of the major demands of HUD’s lawsuit against Westchester County, N.Y., and it is the substance of laws passed in Cook County, Ill. and elsewhere lately, at the urging of “fair housing” groups, banning so-called source-of-income discrimination. [Chicago Reporter, Courier News, Tenants Union of Washington State] The message of these laws to hapless landlords like the one who narrates the Chive video is: sorry about your house getting trashed, but tough luck, see you in court if you try to protect yourself. (& welcome Above the Law readers).
Under the “disparate impact” theory of housing discrimination, private business decisions or local government policies not motivated by race are deemed unlawful anyway because they have a differential statistical impact on housing transactions by members of a given racial group. A mortgage lender’s policy of lending only to borrowers with high down payments or sterling credit ratings, for example, might be subject to attack on the grounds that it tended to screen out minority borrowers, even if such was not its intention, and was not justified by business necessity. The U.S. Supreme Court has never ruled on this theory; two years ago, in a case called Magner v. Gallagher, it was widely speculated that the Court would disapprove disparate-impact claims, a prospect the Obama administration (which is deeply invested in the theory) managed to dodge only by arranging to moot the case through settlement.
In the new Supreme Court case of Township of Mount Holly v. Mount Holly Gardens Citizens in Action, Inc., plaintiffs claim that it is illegal for a New Jersey township to slate a tract of development land for detached single-family housing because poorer persons are less likely to be able to afford such housing and minority persons are more likely to be poorer. The Obama administration is backing the claim. [earlier] The Cato Institute, along with the Pacific Legal Foundation and several other groups, has filed an amicus brief defending the township. Writes Ilya Shapiro at Cato at Liberty:
The Gardens’ residents can’t afford the new housing not because of their race but because of their poverty. While it’s a harsh truth that a disproportionate number of minorities live in poverty, claiming that making expensive products is racist and that these “racists” have an obligation to compensate the victims of poverty is absurd. The FHA was intended, in the words of Senator Walter Mondale, “to permit people who have the ability to do so to buy any house offered to the public if they can afford to buy it. It would not overcome the economic problem of those who could not afford to purchase the house of their choice.”
For following the law as it was written and attempting to improve a blighted neighborhood without resorting to eminent domain abuse, Mount Holly was rewarded with a decade’s worth of vexatious litigation — which the Supreme Court should now end once and for all.
More: Hans Bader, Examiner.
An Ohio jury found in 2011 that an apartment owner “had not violated federal law in running the Craigslist ad that read: ‘Our one-bedroom apartments are a great bachelor pad for any single man looking to hook up.'” Now an appeals court has ruled that the judge gave improper jury instructions and that the nonprofit Miami Valley Fair Housing Center, which claimed the ad violated the rights of families and women, can get another trial. [Associated Press]