Section 8 of the 1988 Housing Act

President Lyndon Johnson signed the Civil Rights Act of 1968 as an addition to the Civil Rights Act of 1964. One issue not addressed in the 1964 act was fair housing. Seven days after the assassination of Dr. Martin Luther King, a longstanding proponent of fair housing, Title VIII of the Civil Rights Act of 1968 became law. This provision is commonly referred to as Section 8 of the Fair Housing Act of 1968.

Historical Background

Social upheaval plagued the U.S. at the time the Fair Housing Act passed. The assassination of Dr. Martin Luther King led to rioting in many cities and casualties of the Vietnam War continued to rise. Minorities comprised most of the military infantry and casualties; at home, however, the soldiers could not purchase any property due to their race or ethnicity. Senator Brooke, an African-American World War II veteran, recounted experiencing the same discrimination upon returning from war.

General Provisions

In general, the Fair Housing Act of 1968 prohibited housing discrimination, including the rental, purchase or financing of a dwelling, on the basis of race, color, religion, sex or national origin. The insurance requirement of the Federal Housing Administration, or FHA, contained "redlining" provisions -- the refusal to insure loans made in areas marked with a red line and based solely on racial and ethnic considerations, not creditworthiness. The legislation made this FHA practice illegal.

Renting Provisions

The Fair Housing Act made it illegal to make property unavailable for rent to members of the protected class by refusing to negotiate terms of the lease or utility agreements, effectively denying them the ability to rent the property. The legislation also prohibited misleading statements about its availability and discriminatory statements regarding the rental. Additionally, statements regarding a protected class' presence in the neighborhood could not be a selling point for the rental.

Ownership-Related Provisions

The non-discriminatory provisions of the Fair Housing Act relating to rentals also related to general home ownership, although the law evolved to include more specific mortgage lending practices. Banks could no longer draw red lines around racially segregated or diverse neighborhoods simply because they didn't want to loan there. Banks could only deny an applicant if he did not meet the credit guidelines and property underwriting guidelines applied to the community-at-large. Lenders also cannot engage in low-balling -- the practice of making an excessively low appraisal based on prohibited considerations. This would ensure a loan denial as it would constitute bad banking practice if the loan exceeded the value of the property.

Racial steering is another practice prohibited by the act, which involves the racially-motivated "steering" of applicants toward or away from certain geographic areas or loan products. The act also prohibited lenders from offering protected classes excessive interest rates or more unfavorable terms or requirements than other loan recipients.

References

• U.S. Department of Housing and Urban Development: History of Fair Housing
• Federal Reserve: Federal Fair Lending Regulations and Statutes Fair Housing Act
• The Fair Housing Center of Greater Boston: 1934--1968: FHA Mortgage Insurance Requirements Utilize Redlining
• The Fair Housing Center of Greater Boston: 1968 -- Federal Fair Housing Act
• National Council on Disability: The Fair Housing Act and Section 504 -- What Congress Intended