FAQ as of August 28, 2026

1. What is disparate impact liability? 

Disparate impact (or “discriminatory effects”) is a theory of liability that does not require discriminatory conduct to be intentional. Instead, it focuses on policies and practices that are neutral on their face and applied consistently to all applicants and/or tenants. These neutral policies can sometimes have a disproportionate negative impact on certain demographic groups, which can be considered to be a violation of the Fair Housing Act and/or Title VI of the Civil Rights Act. 

Some examples are: 

• Stringent criminal history screening policies can have a disparate impact on African American and Hispanic applicants
• Strict 2-person per bedroom policies can have a disparate impact on families with children
• Mortgage lending policies excluding borrowers who reside in certain zip codes can have a disparate impact based on race and ethnicity

2. Why can housing providers be held liable for having a policy that isn’t intended to be discriminatory? 

Federal courts have long recognized disparate impact claims, and it has also been HUD’s interpretation for many years that the effect of a policy, not just the intention behind it, should be considered when determining liability under the Fair Housing Act. HUD passed the first disparate impact regulation in 2013, and in 2015, the U.S. Supreme Court agreed with HUD’s interpretation when it held that disparate impact claims are valid under the Fair Housing Act. (See Texas Department of Housing & Community Affairs v. Inclusive Communities Project, Inc.) So, whether it seems “fair” or not, this method of proving liability has existed for many years. 

3. Does HUD still recognize disparate impact liability?

The current HUD administration has a different interpretation of the law than past administrations and does not believe that disparate impact liability is in line with the purpose of the Fair Housing Act. As of today, yes, disparate impact regulations are still in effect; however, HUD is actively in the process of changing that. 

In January 2026, HUD issued a Notice of Proposed Rulemaking (which is essentially a draft of a regulation) that seeks to remove the existing disparate impact regulations under the Fair Housing Act. In a nutshell, this would be a new regulation to revoke an old regulation.   

Although the public comment period ended for that proposed rule in February 2026, HUD has issued another related Notice of Proposed Rulemaking in August 2026 that would remove HUD’s disparate impact regulations under Title VI as well. (Title VI is another federal law that prohibits discrimination on the basis of race, color, and national origin for federally funded entities.) Due to this supplemental Proposed Notice of Rulemaking, HUD has extended the public comment deadline for both proposed rules until October 9, 2026. 

Until these proposed rules are published as final, regulations pertaining to disparate impact remain in effect. However, these rules could feasibly be finalized before the end of the year.

4. When HUD’s disparate impact regulations are removed/revoked, does that mean that residents can no longer file a complaint based on disparate impact?

Yes, it means that applicants and tenants will no longer have a legal basis for filing an administrative complaint with HUD for claims relying on disparate impact theory. After disparate impact regulations no longer exist, attempting to file a disparate impact claim with HUD will be the same as attempting to file a claim based on shoe size. HUD will simply decline to accept and investigate these complaints going forward.

5. Will there be any means of seeking recourse for applicants and tenants who believe they have a disparate impact claim under the Fair Housing Act?

Disparate impact claims were recognized by federal courts well before any regulation was passed on disparate impact, so yes, federal courts still recognize disparate impact claims, as they will look to U.S. Supreme Court precedent. In fact, the proposed rule at issue specifically acknowledges that HUD is leaving these questions for the courts.

In addition, state fair housing agencies are charged with enforcing their state fair housing laws. They, like HUD and the courts, have recognized disparate impact as a means of establishing liability. The revocation of HUD’s Fair Housing Act and Title VI regulations does not necessarily bind the state agencies to this new interpretation because they are also interpreting their state laws. Therefore, if an applicant or resident filed a complaint directly with their state fair housing agency, the agency may continue to recognize disparate impact claims. 

6.  Until these regulations are finalized, how is HUD handling new or existing complaints alleging disparate impact? 

HUD issued a Memo dated September 16, 2025, in which it states that “resources must be redirected to cases with the strongest evidence of intentional discrimination.” The way HUD is implementing this goal is a new requirement for FHEO offices nationwide: for any conciliation agreement, Voluntary Compliance Agreement, or cause finding, the office must submit a “priority memorandum” to HUD’s Principal Deputy Assistant Secretary (at HUD headquarters) with a detailed summary of the claim, what evidence was considered, calculation of damages, etc. The Principal Deputy Assistant Secretary will then determine whether the outcome of each particular investigation is in line with HUD’s priorities. 

It is clear that if an FHEO Regional Office issues a finding based on disparate impact, it will not pass muster under this new procedure and that HUD will not dedicate funds or staff to taking any further action on these cases.  In a nutshell – disparate impact complaints may still be accepted by HUD, but as of September 2025, these complaints will not result in a charge.