Fair Housing

Question 1

A Chinese woman born in England wants to purchase an office building. The owner refuses to sell to her.

This violates:

1. Fair Housing Act of 1968
2. Civil Rights Act of 1866
3. State Civil Rights Act
4. ECOA

Answer 1

2. Civil Rights Act of 1866

• Act of 1866 covers race, color, ancestry
– All properties, personal and real, residential and commercial
• Fair Housing Act of 1968 does not apply to commercial property
– Ancestry is not covered
• ECOA
– Equal Credit Opportunity Act

Question 2

A person selling or leasing residential housing may NOT discriminate by solely
race under which law?

A. Housing and Community Development Act of 1974
B. Civil Rights Act of 1866
C. Federal Fair Housing Amendment Act of 1988
D. State Constitutions

Answer 2

B. Civil Rights Act of 1866

Fair Housing Act – Protected Classes
• 1968 race, color, religion, and national origin.
• 1974 added sex / gender.
• 1988 added handicap status and familial status

Know the dates when protected classes were added!

Question 3

The Federal Fair Housing Amendment Act of 1988 prohibits discrimination based on

A. age and sex.
B. disability and religion.
C. familial status and disability.
D. family status and age.

Answer 3

C. familial status and disability

Familial status
Refers to households with individuals under 18 who live with parents or legal custodians; pregnant women; or anyone obtaining legal custody of a child.
• Exemption: Housing for older persons (covered later in this session)
• Managers cannot charge a higher deposit to families with children or segregate families in a specific section.
• All facilities must be open to children.
• Rules stipulating children must be accompanied by an adult are permitted.

• Disability is a physical or mental impairment that substantially limits or curtails one or more major life activity.
• Major life activities: Caring for one’s self, performing manual tasks, walking, seeing, hearing, speaking, and working.
• Physical impairment: Physiological disorder or condition, e.g., blindness, hearing impairment, mobility impairment, HIV infection, alcoholism, drug addiction, chronic fatigue, etc.
• Mental impairment: Any mental or psychological disorder.

Question 4

The Federal Fair Housing Act of 1968 identified which protected class?

A. national origin
B. marital status
C. age
D. gender

Answer 4

A. national origin

Fair Housing Act – Protected Classes
• 1968 race, color, religion, and national origin.
• 1974 added sex / gender.
• 1988 added handicap status and familial status

Question 5

A handicapped person moves into an apartment and wants grab bars installed in
the shower. Under the law,

A. the tenant may install them at his expense.
B. the landlord must install and pay for them.
C. the landlord must install them before renting the unit.
D. the landlord can refuse the alteration to the property.

Answer 5

A. the tenant may install them at his expense.

• Federal Fair Housing Act requires landlords to:
– Make reasonable accommodations in rules, policies, practices, or services for disabled person to use housing on an equal basis with non-disabled persons.
– Allow tenant to make reasonable modifications to a dwelling
or common use areas, at tenant’s expense. Landlord can require tenant to restore property to its original condition upon moving.

Question 6

The California law that prohibits discrimination in the sale, rental or financing of practically all types of housing is called the:

A. Holden Act.
B. Housing Financial Discrimination Act.
C. California Fair Employment and Housing Act.
D. Unruh Civil Rights Act.

Answer 6

C. California Fair Employment and Housing Act.

• The California Fair Employment and Housing Act (Rumford Act) prohibits discrimination in the sale, rental or financing of housing.
• Housing Financial Discrimination Act (Holden Act) prohibits discrimination in real estate lending.
• The Unruh Civil Rights Act covers illegal discrimination in all business establishments
– including real estate companies.

Federal Fair Housing Protects: Race, Color, National Origin, Religion, Sex, Disability, and Family Status

CALIFORNIA Fair Housing Protects: Race, Color, National Origin, Religion, Sex, Disability, Family Status AND Age, Ancestry, Genetic Information, Marital Status, Medical Condition, Sexual Orientation, and Source of Income.

Question 7

Familial status under Federal Fair Housing prohibits discrimination against

A. Parents and all children.
B. Parents that are handicapped.
C. Parents with children under 18 years of age and pregnant women.
D. Children who are dependent.

Answer 7

C. Parents with children under 18 years of age and pregnant women

• Familial status refers to households with individuals under 18 who live with parents or legal custodians; pregnant women; or anyone obtaining legal custody of a child.
– Managers cannot charge a higher deposit to families with children or segregate families in a specific section.
– All facilities must be open to children.
– Rules stipulating children must be accompanied by an adult are permitted.
– Exemption: Housing for older persons

Question 8

If a property has the right to exclude families with children, which of the following parties would be allowed to reside on the property?

A. A 62-year-old retired doctor
B. A 52-year-old employed lawyer
C. A 50-year-old nurse
D. A 54-year-old minister

Answer 8

A. A 62-year-old retired doctor

Fair Housing Act – Exceptions Senior Citizen Housing 62 and Older
• ALL housing is intended for and solely occupied by people 62 years or older.

55 and Older
• The housing is intended and operated for occupancy by at least one person 55 years or older in each unit.
• 80% of the units are occupied by at least one person 55 years or older.

Question 9

What statement would most likely relate to blockbusting?

A. “They’re moving in; better sell today!”
B. “I’ll take you to an area where I think you’ll be better off.”
C. “I won’t initiate a loan in that area.”
D. “Only Catholics can live in that area.”

Answer 9

A. “They’re moving in; better sell today!”

Unruh Civil Rights Act
• Steering - is the illegal practice of only showing buyers property in certain areas.
• Redlining - The illegal use of a property’s location to deny financing.
• Blockbusting - Causing panic selling, is the illegal practice of telling people that property values in a neighborhood will decline because of a specific event
• Such as the purchase of homes by minorities.
• Persuading an owner to sell or rent housing by saying that people of a particular race, religion, etc., are moving into the neighborhood
• Also referred to as panic selling

Question 10

Which of the following scenarios demonstrates an exception to the provisions of the Federal Fair Housing Law?

A. A brokerage licensed as a property management firm investigates the familial status of prospective tenants
B. An owner occupant of a duplex instructs the listing agent not to show the property to women
C. A church lodge restricts lodge stays to members of the church only
D. The owner of a six-unit apartment building restricts occupancy to Caucasians only

Answer 10

C. A church lodge restricts lodge stays to members of the church only

• The protected classes under the Fair Housing Act of 1968 include race, color, religion, national origin, sex, handicap/disability, and familial status; not age
– Exemptions to the Act:
• Private club
• Religious Organizations
• FSBO
• Rental of a room or unit in a dwelling / less than 4 units

• Jones v. Mayer (1968) prohibits discrimination based on race by upholding the 1866 Civil Rights Act and the 13th Amendment to the U.S. Constitution prohibiting slavery.

No transaction involving an agent is exempt!

Question 11

Which situation would legally allow racial discrimination?

A. A building owner of 4 units or more that the owner occupies one unit
B. A building owned by a local religious organization
C. A room rental of a private homeowner occupying the home
D. Under no circumstances

Answer 11

D. Under no circumstances

• There are no exceptions when it comes to racial discrimination
• Remember the protected classes
• Race, Color, Religion, Sex, National Origin, Disability, and Familial Status
• Remember California has additional protected classes

Actions Prohibited by the Fair Housing Act
• Refusing to rent housing
• Refusing to sell housing
• Treating applicants differently from one another for housing
• Treating residents differently from one another in connection with terms and conditions
• Advertising a discriminatory housing preference or limitation
• Providing false information about the availability of housing
• Harassing, coercing, or intimidating people from enjoying or exercising their rights under the act
• Imposing different loan terms for purchasing, constructing, improving, repairing, or maintaining a residence
• Denying use of, or participation in, real estate services such as brokers’ organizations or multiple-listing services

Question 12

Who enforces the Fair Housing Act?

1. Department of Housing and Urban Development (HUD)
2. Civil Court
3. US District Court
4. Only 1 and 3

Answer 12

4. Only 1 and 3

Enforcement of the Fair Housing Act
• Any complaints must be filed with the Department of Housing and Urban Development (HUD).
• The Fair Housing Act gives HUD the authority to hold administrative hearings unless
• one of the parties elects to have the case heard in U.S. District Court and to issue subpoenas.
• The Administrative Law Judge in these proceedings can issue an order for relief, including actual damages, injunctions, or other equitable relief and penalties.

Question 13

In regards to advertising, the Fair Housing Act:

1. Real estate brokers to display the Equal Housing Opportunity Poster
2. Photographs, drawings, or other graphic techniques may not be used to indicate exclusiveness.
3. If models are used in display advertising campaigns, they should be a clear reasonable representation of majority and minority groups in the metropolitan area
4. All of the above

Answer 13

4. All of the above

Fair Housing Act – Advertising
• Human models in photographs, drawings, or other graphic techniques may not be used to indicate exclusiveness.
• If models are used in display advertising campaigns, they should be clearly definable as reasonable representation of majority and minority groups in the metropolitan area
• Requires businesses, such as real estate brokers and real estate lenders, to display
• Equal Housing Opportunity Poster that depicts the equal housing logo.
• Failure to display the poster at all or to display the most recent version can be used as prima facie evidence of discrimination

Question 14

An act that Is derived from an earlier law (Rumford Act) that dealt specifically with prohibiting discrimination in the sale, rental, or financing of practically all types of housing. Covers both housing and employment discrimination.

1. Title VIII of the Civil Rights Act of 1968
2. California Fair Employment and Housing Act (FEHA)
3. Federal Fair Housing Act
4. Unruh Civil Rights Act

Answer 14

2. California Fair Employment and Housing Act (FEHA)

• The protections under FEHA are broader than the federal law.
• FEHA provides protection from harassment or discrimination in housing
• Violations are reported to the state Department of Fair Employment and Housing.
• specifically with prohibiting discrimination in the sale, rental, or financing of
practically all types of housing.
• FEHA covers both housing and employment discrimination.

Unruh Civil Rights Act
• Covers illegal discrimination in all business establishments—including real estate companies.
• Very important for real estate licensees to be aware of the discriminatory practices of steering, blockbusting, and redlining.

Steering
• is the illegal practice of only showing buyers property in certain areas.

Blockbusting is causing panic selling, is the illegal practice of telling people that property values in a neighborhood will decline because of a specific event
• Such as the purchase of homes by minorities.

Redlining
• The illegal use of a property’s location to deny financing.

Question 15

Act that prohibits all financial institutions from discriminating in real estate loan approvals based on the geographic location, the neighborhood, or any other characteristic of the property.

1. Holden Act
2. California Fair Employment and Housing Act (FEHA)
3. Federal Fair Housing Act
4. Unruh Civil Rights Act

Answer 15

1. Holden Act

Housing Financial Discrimination Act
• (Holden Act) prohibits all financial institutions from discriminating in real estate loan approvals based on the geographic location, the neighborhood, or any other characteristic of the property.
• Violations may be reported to the state Secretary for Business and Transportation
• who must act on the complaint within 30 days.

Question 16

Other than the owning brokers, who regulates all aspects of the real estate transactions?

1. Escrow company
2. Seller’s Broker
3. Real Estate Commissioner
4. None of the above

Answer 16

3. Real Estate Commissioner

Real Estate Commissioner’s Regulations (2780)
• A person’s real estate license will be restricted, suspended, or revoked for any violation of the fair housing laws.
• The Commissioner regulates all aspects of the real estate transaction from prospecting for listings through the closing of the transaction.
• In fact, every conceivable activity is regulated.

Activities Prohibited by Regulation 2780
• Refusing to list and show properties to selected people
• Processing some applications more slowly than others
• Stating to some people that property is not available when it is
• Using special codes on applications
• Actively discouraging other licensees from working with minorities
• Charging more for the cleaning or security deposit to some applicants
• Assisting other licensees to discriminate

• Prohibits Blockbusting - Licensees are prohibited from creating fear, alarm,
or transmitting written or oral warnings regarding the present or prospective entry of one or more persons of (Protected Classes) into an area or neighborhood.

Question 17

If Lenders do not apply their credit guidelines to each potential borrower in the same manner, they will violate?

1. Regulation 2781
2. Federal Fair Housing Act
3. Equal Credit Opportunity Act (ECOA)
4. Housing Financial Discrimination Act (Holden Act)

Answer 17

3. Equal Credit Opportunity Act (ECOA)

• Equal Credit Opportunity Act (ECOA) is a federal law that prohibits discrimination in granting credit to people based on sex, age, marital status, race, color, religion, national origin, receipt of public assistance, or exercised rights under the Consumer Protection Act.
  
  • Enforced by FTC and the Department of Justice
  • Customer cannot be discouraged from applying for credit based on such factors
  • Lenders must apply their credit guidelines to each potential borrower in the same manner.
• The following are protected under ECOA, but not under Federal Fair Housing Act:
  
  • Marital Status. Creditors may not ask questions about spouse unless the spouse is also applying for credit.
  • Age. Applicant must be of legal age (18). There is no upper limit.
  • Dependence on Public Assistance. Lenders are prohibited from discriminating against recipients of public assistance programs, provided income is stable.

• Note: ECOA requires creditors to notify applicants of their lending decision within 30 days of filing complete application.

Question 18

Two top salespersons have been competing for listings in the same farm area, frequently cutting commissions. They get together and agree to charge the same fees so that neither one of them is hurt economically.

This agreement:
A. Is okay as long as both brokers agree
B. Is a violation of Regulation Z of the Truth in Lending Act
C. Is a violation of the Sherman Antitrust Act
D. Is a violation of RESPA

Answer 18

C. Is a violation of the Sherman Antitrust Act

• Sherman Antitrust Act deals with illegal price fixing, market fixing and group boycotting
• Regulation Z of the Truth in Lending Act deals with lending practices
• RESPA – Real Estate Settlement Procedures Act deals with the disclosure of the costs of buying and selling a home

Question 19

A purchaser goes to a lender to apply for a mortgage loan. At the time of the application, Regulation Z of the Federal Truth in Lending Act would require the lender to give the purchaser:

A. A loan commitment
B. A Disclosure of the APR
C. Closing statement
D. A copy of the home appraisal

Answer 19

B. A Disclosure of the APR

• Regulation Z requires a disclosure of loan-related costs (for example: points, interest rates, etc.), not a commitment
• RESPA requires a disclosure of the costs of buying or selling a home (for example: title search fees, insurance costs, attorney fees, recordation costs)
– A Closing Statement is a requirement of RESPA

Question 20

Refusing credit for which of the following reasons would be a violation of the Federal Equal Credit Opportunity Act?

A. Marital status
B. Sexual orientation
C. Familial status
D. Handicap

Answer 20

A. Marital status

• While marital status is not protected under the Federal Fair Housing laws, age and receipt of public assistance are protected statuses under the Equal Credit Opportunity Act
– ECOA covers
• Race, color, religion, sex, national origin, age, marital status, receipt of public assistance
• Can’t discriminate against source of income (i.e., alimony)

Sexual orientation is not protected by either act

Question 21

Federal regulations require that a purchaser of a home be given a good faith estimate of the costs of buying that home.

The applicable federal regulation is:
A. Real Estate Settlement Procedures Act
B. Federal Truth In Lending Act
C. Federal Fair Credit Reporting Act
D. Regulation Z

Answer 21

A. Real Estate Settlement Procedures Act

• RESPA requires a Good Faith Estimate of closing costs within 72 hours of loan application and requires itemized closing statements for both buyer and seller at time of closing.
• Regulation Z requires a disclosure of loan related costs (for example: points, appraisal costs), NOT a commitment. It also requires APR.
• Affiliated Business Disclosure Multiple relationships must be disclosed (for example: broker/agent owned title company)