(Adds background on targeted regulation, insurance industry objections, criticism by anti-discrimination group, paragraph 5-12)
By Lawrence Hurley
WASHINGTON, May 10 (Reuters) - President Donald Trump’s administration signaled on Thursday it may reverse housing anti-discrimination protections established under Democratic former President Barack Obama that exposed companies to a broad range of legal claims under federal law.
The U.S. Department of Housing and Urban Development (HUD) said it will move toward reconsidering the 2013 rule that laid out when so-called disparate impact claims can be brought against lenders, insurers and other major players in housing under federal fair housing law.
Disparate impact is a legal tool that has been used for decades to bring bias lawsuits over actions that have a discriminatory effect even with no evidence of discriminatory intent.
The U.S. Supreme Court ruled in 2015 ruling that such claims can be brought under the Fair Housing Act, a landmark civil rights law prohibiting discrimination in the sale, rental and financing of housing based on race, religion, sex or national origin. Insurance companies in particular have fought its application to their industry.
HUD said its review will examine whether the Obama-era regulation is consistent with the Supreme Court ruling. The review is the first step in what could be a lengthy process if the administration decides to change the regulation.
Under Secretary Ben Carson, HUD has sought to roll back Obama-era housing bias safeguards. Advocacy groups this week sued HUD over its suspension of a rule requiring local governments to address patterns of racial residential segregation.
Anti-discrimination activists criticized HUD’s latest move.
“Protecting the disparate impact standard strengthens our communities and our nation. We all deserve the opportunity to raise healthy, productive families in the community of our choice,” said Lisa Rice, president of the National Fair Housing Alliance.
Carson said in a statement that HUD “remains committed to making sure housing-related policies and practices treat people fairly.”
The American Insurance Association and other business groups that oppose disparate impact claims sued HUD in federal courts in Washington and Chicago after the Obama-era rule was issued. They argued that disparate impact claims against them affected a broad range of housing-related business decisions and made them subject to civil rights litigation.
A hearing in the Washington case was held on Thursday.
The litigation concerns only the rule’s application to insurers. The insurance groups have complained that the rule would force companies to take account of race and ethnicity in making business decisions and might require them to disregard legitimate risk factors.
Reporting by Lawrence Hurley; Editing by Will Dunham