FAU Expert: Strike ‘Small Bigot Exemption’ from Fair Housing Law

By paul owers | 8/4/2020

The U.S. Department of Housing and Urban Development (HUD) said it is replacing a 5-year-old regulation from the Obama Administration designed to promote affordable housing, but more meaningful change would occur with the elimination of a key exemption in the federal Fair Housing Act, said Ken H. Johnson, Ph.D., an economist in Florida Atlantic University’s College of Business.

Under a loophole in the 1968 law, single-family homeowners can effectively discriminate if they sell or rent their properties without hiring real estate brokers, do not use discriminatory advertising, and own no more than three such properties. The exemption essentially allows discrimination by people who can avoid using brokers and therefore sidestep renting or selling to certain groups, according to Johnson.

“I call it the ‘small bigot exemption’ because it allows individual homeowners to discriminate and put pressure on their neighbors to do the same,” he said. “It slows down access to housing for all.”

Johnson believes the issue of fair housing has disintegrated into political posturing by both Democrats and Republicans, missing an opportunity to make real, positive change.

Obama’s Affirmatively Furthering Fair Housing of 2015, a provision of the Fair Housing Act, was meant to encourage more affordable housing, but that could have hurt upscale communities that insisted affordably priced properties would torpedo property values, according to Realtor.com. But the website said the Trump Administration watered down the regulation in 2018 before announcing July 23 that it would end it.

HUD Secretary Ben Carson called the regulation “unworkable and ultimately a waste of time for localities.” Instead, HUD announced a new rule, Preserving Community and Neighborhood Choice, which “defines housing broadly to mean housing that, among other attributes, is affordable, safe, decent, free of unlawful discrimination, and accessible under civil rights laws.”

Whereas the Obama Administration rule passed on expenses for federal oversight to local entities, the Trump Administration prefers local oversight with loose federal attention paid to the purpose of the Fair Housing Act, Johnson said.

Yet, both administrations and their predecessors have left in place the “small bigot exemption,” missing the opportunity to fundamentally improve fair housing, Johnson believes. If homes are sold to qualified buyers without regard to race, gender, age and other protected classes, people will live where they want and can afford, helping to integrate neighborhoods across the country, he noted.

“If either party wants to impress me, they would legislate for the abolishment of this exemption,” he said. “It is a very easy target. It is my opinion that the removal of this would do more to promote true fair housing than what either the Obama or Trump administrations have done so far.”