By Lori Sommerfield, Chris Willis, Taylor Gess & Lane Page; Consumer Financial Services Law Monitor, Troutman Pepper Locke
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On May 5, Craig Trainor, Assistant Secretary for the Office of Fair Housing and Equal Opportunity (FHEO) at the U.S. Department of Housing and Urban Development (HUD), used the American Bankers Association’s Risk and Compliance Conference to send a clear message about how the Trump administration plans to enforce the Fair Housing Act (FHA) going forward, including with respect to how it will treat special purpose credit programs (SPCPs).
Trainor stated that the FHEO is “returning to the beating heart” of FHA enforcement by prioritizing cases with “strong evidence of disparate treatment,” and that it “will no longer chase phantom discrimination based upon statistical disparities without evidence of intentional unlawful treatment.” In other words, HUD is signaling a focus on intentional discrimination claims, and a corresponding retreat from large‑scale disparate impact cases built primarily on statistical disparities.
At the same time, Trainor underscored that the FHEO is closely scrutinizing SPCPs. He specifically referenced a program offered by the Washington State Housing Finance Commission that was “created to address disparities resulting from past discrimination against racial groups.” As summarized below, earlier this year the FHEO launched an investigation into that program. Trainor warned that SPCPs “that do not comply with the statutory text of the [FHA] continue to be subject to enforcement,” and he cautioned that lenders “found engaging in illegal discrimination will be held accountable.”
Trainor also encouraged institutions that may have offered programs with race‑based eligibility criteria to take “immediate remedial actions” and indicated that “meaningful” remedial efforts will be viewed favorably in deciding whether and how to pursue enforcement.