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EXECUTIVE PROGRAMS REAL ESTATE SCHOOL

FAIR HOUSING Continuing Education – 3 Hour Fair Housing Textbook By Michelle North

EGGHEAD PUBLISHERS, LLC © 2020 Except as permitted under the Copyright Act of 1976, this textbook or material may not be reproduced in whole or in part, in any manner.

Table of Contents

Chapter 1 - Discrimination in Housing……………………………………......... 1 Discrimination in Housing ………………………………………………………….……............. 1

Anti-Discrimination Legislation ………………………………………………………………… 3

Discrimination in Real Estate–Related Activities ………………………………………... 6

Definitions …………………………………………………………………………………………………….. 8 Incremental Assessments/Quiz ……………………………………………………………………….. 12 Answers/Remediation ……………………………………………………………………………………. 14

Chapter 2 – Federal Fair Housing Laws ………………………..……………… 15 Federal Fair Housing Laws ………………………………………………………………………. 15

Using Zoning to Circumvent Fair Housing …………………………………………………… 17

Fair Housing Amendment of 1988 ……………………………………………………………… 18

Voluntary Affirmative Marketing Agreement ………………………………………………. 22

Definitions ……………………………………………………………………………………………… 26 Incremental Assessments/Quiz ……………………………………………………………………….. 29 Answers/Remediation ……………………………………………………………………………………. 31

Chapter 3 – California Fair Housing Laws ………………………..…………. 32

Fair Employment and Housing Act (FEHA) ……………………………………………….. 32 Unruh Civil Rights Act ……………………………………………………………………………… 33 Sales, Rental, or Lease of Residential Real Estate ………………………………………... 37 Incremental Assessments/Quiz ……………………………………………………………………….. 41 Answers/Remediation ……………………………………………………………………………………. 42

Chapter 4 – California Code and Regulations ……………………………... 43 California Business and Professions Code …………………………………………………… 43

California Real Estate Commissioner’s Regulation ……………………………………… 44

Duty to Supervise …………………………………………………………………………………………… 51 Incremental Assessments/Quiz ……………………………………………………………………….. 52 Answers/Remediation ……………………………………………………………………………………. 54

Chapter 5 – Fair Lending Laws …………………………………...………………… 55 Discrimination ....……………………………………………………………………………………… 55

Consumer Credit ………………………………………………………………………………………. 57

Summary of Creditor’s Rights ……………………………………………………………………. 58

Redlining ………………………………………………………………………………………………… 61

Discrimination in Brokerage Service …………………………………………………………. 62

Predatory Lending …………………………………………………………………………………… 63

Incremental Assessments/Quiz ……………………………………………………………………….. 64 Answers/Remediation ……………………………………………………………………………………. 65

Chapter 6 – Discrimination in Housing for the Disabled ……………... 66 Americans with Disabilities Act (ADA) ……………………………………………………….. 66

Title I ………………………………………………………………………………………………………. 67

Title III - Public Accommodations ………………………………………………………………. 69

Barriers ………………………………………………………………………………………………………….. 70 Enforcement of Title III …………………………………………………………………………….. 72

Administration of the Fair Housing Act ………………………………………………………. 73

Incremental Assessments/Quiz ……………………………………………………………………….. 75 Answers/Remediation ……………………………………………………………………………………. 77

FAIR HOUSING Chapter1 – Discrimination in Housing

1 EGGHEAD PUBLISHERS, LLC © 2020

FAIR HOUSING

Chapter 1 - Discrimination in Housing

Discrimination in Housing

Discrimination in Housing is illegal and there are various laws protecting

the public from various forms and types of discrimination. Owners of Real

Property are prohibited from discrimination in the sale, rental, or leasing of their

property. Real Estate Professionals should not accept a Listing or any other type

of Real Property contract from a property owner that is trying to discriminate in

any way including making the discriminatory act a condition of the contract.

Property owners, Real Estate Professionals, salespeople, Lenders, and hotel

management are all prohibited from exercising any acts of discrimination in

regards to housing accommodations.

Civil Rights Act of 1866 prohibits racial discrimination and the 13th

Amendment abolishes slavery, however, little was done to uphold the Civil

Rights Act for nearly one hundred years. Many County Records and Preliminary

Title Reports still contain CC&Rs from the early 1900s that exercise

discrimination in the establishment of housing development and subdivisions.

Such CC&Rs are illegal and the Title Insurance Companies clearly state that even

though they remain a part of Recorded Documents with the County Recorder’s

Office.

There are no exempt ions to the C iv i l R ights Act o f 1866.



Civil Rights Act of 1968, also known as the Fair Housing Act, was created

to control discrimination in the housing market. The Federal Fair Housing Act

applies to all residential property transactions including sale, lease, lending,

advertising, and any other acts relating to housing. Under Title VIII of the

Civil Rights Act of 1968 prohibits discrimination in housing based on the

following:

Race

Color

Religion

Sex

National Origin

Ancestry

Handicap

Familial Status

The following are exempt from the compliance with this Act:

Families with minor children may be prohibited based on Familial

Status.

Adult communities may discriminate based on age if all residents are

62 or older or 80% of the complex is occupied by residents 55 and

older and special services for the elderly are offered

Religious organizations, Societies, or affiliated non- profit

organizations dealing with their privately owned property may limit

transactions to their members. Membership may not be restricted

based on race, color, or national origin.

Private clubs limited to members only for lodgings that are not open

to the public in a commercial capacity.

Rental by a property owner of a single-family residence (SFR) if they

own three SFR rentals or less.

Room rental in an owner-occupied dwelling of up to four units.

Exemption from the Federal Fair Housing Act does not provide exemption from the

Civil Rights Act of 1866 and does not override any state laws prohibiting discrimination.



Department of Housing and Urban Development (HUD) and the US

Attorney General are responsible for hearing complaints of discrimination in

housing by the public. A party that has been discriminated against has one year to

file a complaint of discrimination with HUD’s Office of Equal Housing

Opportunity (OEO) or two years to file a lawsuit in either State or Federal

Court.

Anti-Discrimination Legislation

Federal and State Fair Housing and Anti-Discrimination Laws relating

to the sale, lease, rent or financing of real property.

1866 - The Civil Rights Act of 1866 prohibits discrimination based on

race and ancestry in any real estate transaction if in the United States. The

law applies to private citizens as well as state action.

1870 - The Civil Rights Act of 1870 reaffirmed the Civil Rights Act of

1866.

1964 - The B & P Code 10177(1) prohibits blockbusting.

1967 - The Commissioner's Regulations 2780, 2781 & 2782 explain the

duties of real estate agents in regard to unlawful discrimination.

1968 - The Fair Employment and Housing Act prohibits all housing

discrimination in California. Protected classes are race, religion, sex, marital

status, national origin, or ancestry. This act also prohibits advertising that

indicates intent to discriminate.



1968 - Jones v. Mayer upheld the constitutionality of the Civil Rights Act of

1866.

1968 - The Civil Rights Act of 1968 prohibits discrimination based on

race, color, religion, sex and national origin in the sale or lease of residential

property. It also prohibits steering, channeling, redlining and discrimination

in advertising, lending and real estate brokerage in residential transactions.

1972 - The Fair Housing Amendment of 1972 amended the federal Civil

Rights Act of 1968 requiring the display of a "Fair Housing Poster."

1975 - The Federal Equal Credit Opportunity Act prohibits

discrimination in residential lending on the basis of race, color, religion,

national origin, sex, marital status, age, or receipt of public assistance.

1975 - The Home Mortgage Disclosure Act Requires lenders to make

annual reports on residential loans to detect redlining.

1977 - The Holden Act prohibits discrimination in residential lending and

financial institutions from redlining.

1982 - Marina Point, Ltd. v. Wolfson and O'Connor v. Village Green

HOA In 1982 and 1983 were court cases that successfully challenged

discrimination to families with children in rental units and condominiums.

1982 - The Amendment to Unruh Act In 1982 was expanded to prohibit

discrimination based on sexual preference and arbitrary age discrimination.

1985 - The Civil Codes 51.2 and 51.3 established the age criterion for

senior citizen retirement communities, which are exempt from arbitrary age

discrimination under the Unruh Act.

1988 - The Fair Housing Amendment of 1988 amended federal Civil

Rights Act of 1968 to include familial status and disability.



1990 - The Americans with Disabilities Act was developed to protect

individuals with disabilities from discrimination in employment, public

services, transportation, public accommodations and telecommunication

services. Under the ADA it requires the owner or lessees of commercial

facilities and public accommodations to make sure that their buildings

comply with the rules.

2019 – The Tenant Protection Act of 2019 creates state-wide rent

stabilization coupled with eviction controls in most multi-unit residential

housing complexes that are more than 15 years old. (Civ. Code, §§ 1946.2,

1947.12.) Passed as a response to an emergency situation; the Act is repealed

by its own terms in ten years. (Civ. Code, §§ 1946.2, subd. (j), 1947.12, subd.

(j); 1946.13, subd. (c).)

Housing Discrimination - Example

The following example describes the renting techniques of an on-site property

manager. Even though she treated both people respectfully, did she discriminate

against them? Has she violated any fair housing laws?

Anna Rodriquez, a 28-year old, single, Hispanic woman recently

graduated from college and moved to a large metropolitan area for a new

job. She stopped at an apartment complex near her work that had a "For

Rent" sign in front. When she inquired about an apartment the manager

showed her a vacant, three-bedroom, 2.5 bath unit which was the only

current vacancy. The manager told her the rent was $1,300.00 per month

and that a $2,000 security deposit was required. She would be happy to

give her an application if Anna were interested in the apartment.

About an hour later, Bill Bennett, a single, white male, inquired about an

apartment. He was shown the same three-bedroom apartment, and was

told the monthly rent was $1,300 and that the $2,000 security deposit

could be paid in two installments.



The manager informed Bill that a studio apartment would be available in

four days for $400 per month and that a one-bedroom apartment was

coming up the following month for $650. Then the manager took Bill

back to the office, where she showed him the floor plans of the other two

apartments. When Bill said that he liked the studio apartment best, the

manager gave him an application and told him to "Fill it out and give me a

deposit check for $150. Tomorrow I'll let you know if your application

has been approved."

Although discreet, her behavior was clearly discriminatory. The

apartment manager violated the Unruh Act (discrimination by a

business), the Rumford Act, all the Federal Fair Housing Laws, and the

Commissioner's Regulations.

The two prospective tenants were treated differently. Whether the

discrimination was because Anna was a single woman or because she was

Hispanic, she was discriminated against.

Although Anna was not denied a rental, she was not told that the security

deposit could be paid in two installments, nor about any upcoming

vacancies. This information was volunteered to Bill, a single, white male.

Whereas Bill was encouraged to fill out the application and pay his

deposit on the first visit, Anna was told to think about the unit and

contact the manager about a rental application if she was interested.

Even if discrimination is subtle, it is still discrimination.

Discrimination in Real Estate-Related Activities

Discrimination in Real Estate-Related Activities is defined as the making

or purchasing of loans or providing financial assistance for purchasing,

improving, repairing or maintaining, or construction of a dwelling that is:

Secured by residential Real Estate

For the purpose of selling, brokering, or appraising the value of

residential Real Estate



It is prohibited under the Fair Housing and Equal Credit Opportunity for any

person engaged in the business of residential Real Estate transactions to commit

any discriminatory acts in the process of performing the related duties.

Practices that are prohibited under this Act include the refusal to provide

information to an applicant or stating that they cannot provide them a loan

based on any of the covered categories.

Quoting different terms such as interest rates and fees that may be excessive or

higher than those offered to other borrowers based on any of the covered

categories is a violation of the Fair Housing Act.

Redlining is an unlawful lending practice that involves refuses to lend in

neighborhoods that are either primarily made up of certain ethnic groups or the

neighborhood is considered less desirable than others.

A Lender that refuses to make a loan must have valid reasons to decline a loan

based on the borrower’s inability to repay or unacceptable property. Refusal to

lend may not be based on an act of discrimination for any of the covered

categories.

Sale of a Loan on the Secondary Market likewise may not be refused

through a discriminatory act based on the covered categories. The decision to

sell or purchase a loan on the secondary market may be based on normal

business practices that qualify a loan on its credit-worthiness and the

probability of repayment.

An Appraisal performed by one that is in the business of Real Estate Appraisal

may not provide a lesser value to a property based on race, color, religion, sex,

handicap, national origin, or familial status. All properties appraised must be

valued on the merit of the individual property.



Definitions

Definitions related to lending according to the Fair Housing Act are as follow:

Annual Percentage Rate (APR) is the percentage of the mortgage loan

principle that would be paid in finance charges including interest rate and fees

charged if the loan were carried for a period of one year. The APR is required

to be disclosed to the borrower to provide an understanding of the total costs

of the loan.

Actual Rate or the Nominal Rate is the amount of interest that the

borrower is paying according to the terms of the Mortgage or Note or the

actual amount of interest being charged on the balance of the loan.

Applicant is the potential borrower that has completed a loan application and

the resulting paperwork.

Borrower is a person(s) that has been approved for a Mortgage loan and is

obligated to repay the loan according to the terms of the loan, Mortgage, or

Note.

Closing Statement- An accounting of funds made to the buyer and seller

separately. Required by law to be made at the completion of every real estate

transaction.

Collateral is a thing of value that is held as security to guarantee the funds

that were loaned in the event that the borrower does not repay. The lender of

a mortgage will foreclose on the security or property if the borrower fails to

meet the terms of the Mortgage



Credit History is the borrower’s record of past debt and the timeliness of

repayment. The credit history provides the lender with an indication of the

borrower’s attitude towards debt and the probability of future payment habits

or their credit-worthiness.

Debt-to-income ratio (DTI), or debt ratio, is the percentage of the

borrower’s income that is obligated for monthly debts. The higher the ratio or

percentage of income, the riskier the borrower based on a possible inability to

pay.

Example:

$1,200 (monthly housing expense) ÷ $5,000 (net monthly

income) = .24 or 24% front-end debt-to-income ratio

$1,200 (monthly housing expense) + $500 (consumer debt-car

payments, credit cards, etc) = $1,700 (monthly debt obligation)

÷ $5,000 (net monthly income) = .34 or 34% back end or total

debt-to-income ratio

Debt-to-income ratio will be shown as: 24/34

Fair Lending is the prohibition of discrimination in lending practices.

Fees are any charges for the services provided in the process of obtaining a

Mortgage. Some of the typical fees are Appraisal, Credit Report, and lender’s

fees.

Loan Estimate provides the borrower with important information, including

the estimated interest rate, monthly payment, and total closing costs for the

loan. It also gives information about the estimated costs of taxes and insurance,

and how the interest rate and payments may change in the future.

http://www.consumerfinance.gov/askcfpb/1941/on-a-mortgage-whats-the-difference-between-my-principal-and-interest-payment-and-my-total-monthly-payment.html

http://www.consumerfinance.gov/askcfpb/1845/what-fees-or-charges-are-paid-closing-and-who-pays-them.html



Mortgage is given to the lender by the borrower to provide security in Real

Property in exchange for a loan used to purchase or refinance the property.

The terms and conditions of the loan must be clearly disclosed to the borrower

and must include:

Dollar amount of the loan

Interest rate

Amortization is the term or period of time of repayment such as a 30

year loan which will have 360 payments

Method of repayment

o Fixed rate means that the interest rate and payment will not

change during the life of the loan

o Adjustable rate loan will have an adjustment to both the interest

rate and the payment at predetermined intervals.

o Balloon payment will require regular payments for a long period

of time then have a large payment due in a shorter period of time.

An example is payments scheduled for a 30 year term, but the total

balance will be due at the end of 15 years.

o Negative amortization is a method that allows payments in an

amount insufficient to cover the interest due. The amount of

shortage is added to the balance of the loan which increases the

balance of the loan.

Points are defined as prepaid interest charges paid to the lender at the time of

Closing for a lower interest rate also commonly called a buy-down. Points are

also the fees charged by the Broker for their services. One point is equal to 1%

of the loan amount.

Pre-payment Penalty is a condition to a loan that requires a penalty for

paying off a loan in full prior to a predetermined date or period of time.

Prepayment penalties must be fully disclosed to the borrower. A prepayment

penalty is generally equal to 6 months of interest when a payment is made in

an amount greater than 20% of the remaining balance of the loan.



Example: Mr. Jones has a loan balance of $100,000 at an interest rate

of 6.0% on a loan with a prepayment penalty. He wants to reduce his

principle balance by making a payment in the amount of $25,000.

$100,000 Balance

x 20% Allowed under the terms

=$20,000 Allowed amount with no prepayment penalty

$25,000 Payment amount

-$20,000 Allowable prepayment

=$5,000 Amount to be penalized

$5,000 Amount to be penalized

x6% Interest rate

=$300 12 months interest

÷2 ½ of 12 months

=$150 6 months interest or prepayment penalty to be

charged

Not all loans have prepayment penalties and the number of years allowable is

based on the type of loan.

FAIR HOUSING Chapter1 – Incremental/Quiz


Chapter 1 – Incremental Assessment / Quiz

1. Complaints of discrimination in housing are to be filed with a. US Attorney General b. HUD c. FBI d. Both a & b 2. The Civil Rights Act of 1866 prohibits discrimination based on a. Race b. Ancestry c. Both a & b d. None of the above 3. Based on the example given on page 5 & 6, the apartment manager violated

which fair housing law? a. The Unruh Act b. The Rumford Act c. Commissioner’s Regulations d. All of the above 4. The practice of refusing to lend in a specified neighborhood based on

discrimination is called a. Blockbusting b. Redlining c. Steering d. Predatory Lending 5. ____________ ratio, is the percentage of the borrower’s income that is obligated

for monthly debts. a. Debit-to-Debt b. Spending c. Debt-to-Income d. None of the above



6. A condition to a loan in which paying off the loan in full prior to a predetermined date or period of time is called a

a. Points Penalty b. Pre-payment Penalty c. Fair Lending Penalty d. None of the above



Chapter 1 – Answers / Remediation

1. D - Department of Housing and Urban Development (HUD) and the US Attorney General are responsible for hearing complaints of discrimination in housing by the public. Page 3 2. C - The Civil Rights Act of 1866 prohibits discrimination based on race and ancestry in any real estate transaction if in the United States. Page 3 3. D - The apartment manager violated the Unruh Act (discrimination by a business), the Rumford Act, all the Federal Fair Housing Laws, and the Commissioner's Regulations. Page 6 4. B - Redlining is an unlawful lending practice that involves refuses to lend in neighborhoods that are either primarily made up of certain ethnic groups or the neighborhood is considered less desirable than others. Page 7 5. C – Debt-to-Income ratio, is the percentage of the borrower’s income that is obligated for monthly debts. Page 9 6. B - Pre-payment Penalty is a condition to a loan that requires a penalty for paying off a loan in full prior to a predetermined date or period of time. Page 10

FAIR HOUSING Chapter 2 – Federal Fair Housing Laws


Chapter 2 - Federal Fair Housing Laws

Federal Fair Housing Laws

Civil Rights Acts of 1866 and 1870 -The first Federal Fair Housing Law was

passed over 100 years ago, and has undergone several amendments and changes

since then. More than a century ago the federal government prohibited racial

discrimination by passing the Civil Rights Act of 1866 and reaffirming it four

years later by passing the Civil Rights Act of 1870. It gave citizens of all races the

same rights to inherit, purchase, lease, sell or hold personal property and real

property (all real property, not just residential).

These acts are very broad in scope and even apply to an individual who

discriminates on the basis of race in the sale of his or her private home.

Since only racial discrimination is covered, they would not cover acts of

discrimination based upon sex, religion, national origin, or other protected

classes.

Jones v. Mayer - Unfortunately, these acts were ignored for 100 years.

However, in the 1968 landmark case of Jones v. Mayer, the Supreme Court

upheld the validity of the Civil Rights Act of 1866.

In this case an owner refused to sell his own house because of the race of the

buyer. The Supreme Court determined that the 1866 Act prohibits "all racial

discrimination, private as well as public, in the sale or rental of property." It

interpreted and applied the 1866 Act which prohibited racial discrimination

by anyone in the United States in the sale, or rental of a property. It rests its

constitutionality on the 13th Amendment which prohibits slavery. This

decision is important because it allows court action on the basis of the 1866

act.

There is an all-encompassing set of rules prohibiting discrimination on the

part of owners of property and their agents. Wherever Federal Law is

applicable, it is paramount.



Legal remedies for violations of the Civil Rights Act of 1866 -Under the

Civil Rights Act of 1866 an aggrieved party goes directly to a federal court to sue

for damages, obtain an injunction to prohibit the sale to another person, or

obtain an order forcing the owner to sell.

Civil Rights Act of 1964 -In 1962 President Kennedy signed an executive

order that prohibited discrimination in residential housing where FHA or VA

loans were made. The Civil Rights Act of 1964 made the executive order law and

expanded the order to cover housing with federally-assisted programs.

Civil Rights Act of 1968 (Fair Housing Act) - The 1866 Civil Rights Act was

augmented by the passage of the Federal Fair Housing Act, found in Title VIII of

the Civil Rights Act of 1968. Protection from discriminatory practices was

expanded to include color, religion, national origin, and sex, as well as race,

making it illegal to discriminate when selling or leasing residential property.

This act is more comprehensive than the Civil Rights Act of 1866, which

prohibits only racial discrimination.

Exemptions from the 1968 Civil Rights Act - Even though greater protection

was offered under the Fair Housing Act, certain transactions by private owners

are not covered. The law does not apply in the following situations, provided

that a real estate licensee is not used to rent or sell the property.

Owners of a single family home can discriminate, provided they do not own

more than three homes and do not use an agent to rent or sell the home.

Owner-occupants of a residential building with four or fewer units can

discriminate, provided they do not use an agent to rent the units.

Private clubs can give preference to members when selling or leasing

housing.

Religious organizations that provide non-profit housing can discriminate

and give preference to its members provided the religion is open to all and

does not discriminate on the basis of race, sex, or national origin.

These exceptions to the Civil Rights Act of 1968 are still violations of the Civil

Rights Act of 1866 with regard to racial discrimination, and a private owner

may still be liable for a lawsuit.



Using Zoning to Circumvent Fair Housing

With the passing of the 1968 Federal Fair Housing Act, blatant discrimination

was forced underground. Cities, counties and new subdivisions turned to

exclusionary zoning laws and restrictive C.C. &R.s to exclude the poor and

minorities. By regulating density, lot size, setbacks, architectural design,

parking, etc., building multi-family or low-income housing would be prohibited

or greatly restricted.

It has been successfully argued that the phrase "make otherwise unavailable or

deny" in the anti-discriminatory laws includes zoning ordinances which have the

effect of denying housing to minorities and other protected classes.

Exclusionary Zoning violates the Civil Rights Acts of 1866 and 1968. The

importance of these cases is that they can be used as examples whenever a

developer wants to rezone for higher density if a discriminatory impact of

single-family zoning can be shown.

Four Exclusionary Zoning Cases:

1. Town of Huntington v. Huntington Branch NAACP. At the time of the

lawsuit, the Town of Huntington, New York, had a population of about

200,000 residents with a racial mix of 95 percent white and less than 4

percent black. A private developer who wanted to build a project

fostering integration, tried to change the zoning from single-family to

multi-family residential. The town refused to rezone.

The court ruled that the town's refusal to rezone to allow multi-family

units outside the urban area had a discriminatory effect because the

area to be rezoned was 98% white. The court ordered Huntington to

remove its restriction of multi-family units to urban areas and to rezone

allowing multi-family construction. The court rejected the rationale for

the zoning that restricting multi-family units to urban areas would

encourage developers to invest in deteriorated and needy sections of

the town.



2. Hope v. County of DuPage. DuPage County, Illinois, a wealthy county,

kept the poor and minorities out of an area through zoning. They

regulated lot size, setbacks and parking, in such a manner as to prevent

housing for the poor and minorities.

The court determined that the regulations were discriminatory and

stopped the enforcement of ordinances; in addition, DuPage County was

ordered to develop a plan that would provide more housing for the

poor.

3. In the case of Southern Burlington County NAACP v. Township of Mount

Laurel, the New Jersey Supreme Court required a township to redo

zoning to provide a fair share of housing for the poor.

4. In a similar California case, Associated Homebuilders, Inc. v. City of

Livermore, the court held that zoning must respond to regional welfare.

Fair Housing Amendment of 1988

The Fair Housing Amendment of 1988 modified the Federal Fair Housing

Act (1968) by extending protection against housing discrimination to

handicapped persons or those based on familial status (families with children).

Handicapped Status includes both physically or mentally handicapped

persons as well as persons with AIDS or the HIV virus. The law specifically

prohibits discrimination against seeing-eye dogs and support animals and a

landlord cannot require additional security deposits because of these animals.

In fact, there are several things a landlord or manager must allow a handicapped

tenant to do in order to have reasonable use and enjoyment of a unit.



The landlord/property manager must adjust the rules, policies, and service to

allow a handicapped person an equal opportunity to enjoy the unit. If the

handicapped person pays for the changes, he or she may alter his or her unit as

well as the common areas if the alterations are needed for the reasonable use

and enjoyment of the premises. The property manager cannot increase the

security deposit because of these alterations. But the landlord can require that

the tenant agree to put the premises back as they originally were if an able-

bodied person would not wish the alterations to remain.

Example - Henry, a representative of the National Alzheimer's Association

called Betty Gardner, the broker for Citywide Realty, to ask her help in

locating a group home with at least five bedrooms on a large lot. Betty pulled

up the available listings on the MLS computer service and found five homes

currently on the market that met the location, price and size criteria of the

organization. One of them was on the same block as Betty's home. Betty

contacted Henry and told him there were four homes that met his criteria,

and set up an appointment to show them. She did not show him the property

on her block.

Betty should have shown all five properties. Apparently Betty believes that

the presence of individuals with Alzheimer’s disease would be a detriment to

her own neighborhood, although she is willing to locate them close to

someone else and even to profit on the sale. Betty is in violation of the 1988

Amendment to the Civil Rights Act of 1968 in discriminating against the

disabled by refusing to tell the organization about the available home.

AIDS Disclosure -Since persons with AIDS or the HIV virus are considered

handicapped, sellers, landlords and real estate licensees cannot discriminate

against them. Effective January 1, 1987, an owner of real property or the

owner's agent does not have to disclose that an occupant of the property is

afflicted with AIDS or had died from AIDS unless specifically asked by the

prospective buyer. AIDS disclosure is unnecessary. An agent does not have to

disclose that a former owner or resident ever had AIDS or died of AIDS.



Example - Your office has a listing on a large home in a good school district.

The present owner has just finished decorating and it is ready for showing.

Everyone in the firm knows that four years ago the son of the owner died

from AIDS. Your broker tells all the agents, "The law does not require

disclosure of a death from any cause after three years." implying that the

death need not be mentioned to prospective buyers.

You show the house to a family that is moving to the area due to a job

transfer. They have three children and they love the huge yard and bright,

cheery rooms. Because of the very reasonable listing price, they want to put

an offer in right away. Should you disclose the fact that a person died from

AIDS who lived in the house.

Unless the prospective buyer specifically asks, do not disclose this

information since the law does not require it. If you voluntary disclose the

death, the seller could sue for damages if the transaction is not completed

based on the disclosure.

Familial Status - Families with children or age discrimination refer to

discrimination against parents or guardians of persons under the age of 18, a

person in the process of obtaining legal custody, as well as any pregnant woman.

When dealing with families, an owner or property manager can avoid practices

which are discriminatory by following these guidelines:

Set reasonable restrictions for the maximum occupancy of units. If the

limits are unreasonable, such as no more than three persons for a three-

bedroom house, it would be considered discriminatory and

unenforceable. The Civil Rights Act of 1968 lets owners set maximum

occupancy of units as long as the rule is enforced without discrimination.

Do not charge higher security deposits for families.

An adults-only designation is no longer permissible, although there are

exceptions to this rule. Even if an apartment complex has an area where

more families live, designation of an area as all-adult is prohibited.



Therefore do not designate special adult-only areas, and do not steer

families towards certain areas of an apartment complex and away from

another area.

Apartments can have rules for children’s' use of common area facilities,

but they cannot be unreasonable or discriminatory.

Familial Status Cases

In Betsey v. Turtle Creek Association, the Turtle Creek Apartments

changed to adult housing which resulted in 54 percent of non-whites and

only 14 percent of whites being evicted.

The Fourth Circuit Court of Appeals held that an adult-only rental policy

not only discriminates against families, but could also be held to be

racially discriminatory.

In the City of Santa Barbara v. Adamson Ten, unrelated adults lived in a

24-room house that had ten bedrooms and six baths plus ample parking.

The city sought an injunction for violating a zoning ordinance. The area

provided for single-family use and defined a family as either two or more

persons related by blood, marriage or adoption living as a housekeeping

unit or up to five unrelated persons.

The California Supreme Court held that people have the right of privacy,

which includes the right to live with whomever they choose. They held

that this statute violates that right of privacy. The court noted that the

size of related families was not limited, but the limitation only applies to

unrelated families. Less restrictive alternatives could have likely been

achieved by regulating floor space facilities to occupancy.



Exemptions to Age Discrimination:

Retirement communities, in which 80 percent of the units are occupied

by at least one person at least 55 years-old and possessing special

facilities for the elderly can be exempt from rules governing age

discrimination.

Housing units solely occupied by persons aged 62 years or older are

exempt.

Equal Housing Opportunity Poster - The Fair Housing Amendment requires

brokers and lenders to prominently display the Equal Housing Opportunity

poster in all brokerage offices, model home sites, lending offices, property

management firms, etc. If a broker fails to display this poster in his or her office,

the broker will have to prove that an act was nondiscriminatory, under federal

law, if a complaint is made. The poster must be at least 11" X 14", state the

phrase "Equal Housing Opportunity," and display the logo.

Voluntary Affirmative Marketing Agreements

Voluntary Affirmative Marketing Agreements (VAMAs) - These Agreements

are negotiated between HUD and any national association that represents some

component of the housing industry, such as Realtors, Realtists, home builders,

real estate license commissions, rental housing managers, and appraisers. Each

Agreement is designed to carry out a broad equal opportunity program,

including outreach, advertising, affirmative employment, safeguards against

racial steering, etc., which are designed to ensure that housing will be marketed

on an equal opportunity basis. The national association becomes party to an

Agreement and then commends its adoption by its member affiliates on State

and local levels.

VAMAs promote institutional change on an area-wide basis.

Advantages to the Housing Industry:

Enables local signatories to avoid the necessity of filing detailed

affirmative fair housing marketing plans for HUD project applications.

Involves minorities and females in an equitable and effective housing

search and location process.



Achieves economies of scale over individual action, since industry group

staff assists individual firms in fulfilling their commitments under the

voluntary agreement or plan.

Provides credit for leadership in dealing with critical social problems, and

puts signatory firms on record in support of fair housing and equal

opportunity.

Promotes understanding and good will between the minority community,

women's groups and housing industry groups.

Makes it difficult for firms involved in discriminatory practices to

undercut legitimate business competition.

Reduces the likelihood of discrimination by agents of signatory firms.

Advantages to the Community:

Make housing readily available

Provide an outlet for all types of demands

Reduce blockbusting and racial steering

Enhance the image of the city which should result in reduced racial

tension

Promote voluntary compliance with civil rights laws, thereby enhancing

awareness of and generating a willingness to comply with these laws.

Actions Prohibited Under the Federal Fair Housing Act - Real estate

licensees should be aware that all applicants for purchase or rental must be

treated the same. The following practices are prohibited by the Federal Fair

housing Act if based on race, religion, color, sex or national origin, handicapped

status, or familial status.

Brokers and their sales associates may not discriminate toward

clients and customers.

Denying anyone the use or participation in any real estate service or

other facilities related to the selling or renting of housing, such as

multiple-listing services.

Refusing to rent, deal or negotiate with any person.



When a property really is open for inspection, refusing to sell, show or

rent it by saying that it is not available.

Discriminating in the terms or conditions for buying or renting housing.

Blockbusting is inducing persons to list or sell their property by playing

on their fears of a loss in value due to minority groups entering the area.

This practice often causes panic selling or large numbers of owners

selling at reduced prices to escape falling property values.

Steering, which is illegal under all fair housing laws, is the practice of

channeling house or apartment seekers to particular areas, whether to

maintain the homogeneity of an area or to change the character of an area

in order to create a speculative situation. Steering is often difficult to

detect because it is so subtle that the client may be unaware that his or

her choices are being limited.

Discriminatory advertising is the targeting of advertisements to a

specific race, sex, religion, national origin, ethnic group or specific family

unit. This is also considered discriminatory and therefore illegal.

Advertising a home for sale or rent that is in a predominantly

minority area in a newspaper primarily read by that minority group is

also considered steering unless the broker also advertised properties in

non-minority areas in the same paper.

Obviously a broker should avoid using terms and phrases such as:

"Chicano," "restricted," "near Beth Torah Synagogue," "across from

the Riviera Country Club," and "short distance to the exclusive private

high school".

Denying home loans or requiring different terms or conditions to obtain

home loans from commercial lenders such as banks, savings and loans,

and insurance companies.



Lenders and insurance companies who refuse to make loans or insure

property in certain areas are redlining, which is illegal.

Example - A small town which is near a major city with large Asian

and Muslim populations has actively recruited service industries to

their community. A developer, hoping to cash in on the expected high

demand for female workers in the town's new industries is building

condominiums and apartments. In order to achieve religious and

racial balance in his developments, the developer tells the brokers

who handle his listings to encourage women buyers and discourage

the Asians and Muslims from the nearby city. The brokers must assist

all working women who applied.

To discourage too many Asian or Muslims, the brokers are directed to:

Claim a property is no longer available, that it is already sold or

rented

Quote a higher price or rent than for the women

Prohibit secondary financing

Since the broker is trying to achieve racial and religious balance in his

developments; not only do they violate the Federal Fair Housing Laws,

but all the State Fair Housing Laws and Commissioner's Regulations

as well. All of these practices violate the Fair Housing Laws and are

illegal.

Advertising that discriminates on the basis of sex

Claiming a dwelling is unavailable to avoid selling or renting on

the basis of race or religion

Quoting higher prices on the basis of race or religion

Prohibiting secondary financing on the basis of race or religion



Definitions

Definitions as they apply to Real Estate transactions according to the Fair

Housing Act are as follows:

Aggrieved person is any person who claims to have been injured by an act

of discriminatory housing act.

Discriminatory Housing Act includes all acts of discrimination performed

against a person during or related to any duties related to the housing

industry including Real Sales, Mortgage Lending, and Leasing.

Dwelling means any structure or building that is designed or intended to be

used as a residential dwelling for one or more families. The sale or lease of

vacant land that is intended for the purpose of constructing a residential

dwelling on any part of the land is included within this definition.

Familial Status refers to one or more persons under the age of 18 who still

lives with their parents or guardians who are legally responsible for them.

This status also includes those who are pregnant or are in the process of

obtaining legal custody to a minor child.

Family is an individual family group for the purposes of this law. The

generally accepted interpretation is that a “family” refers to actual persons,

not other entities such as those categories included in the definition for

“Person”.

Handicap refers to an individual with a physical or mental impairment that

effects or limits their ability to perform normal life functions such as the

ability to walk, see (blind), or hear (deaf).

Legal Notice. The legally required notification of others, as a result of

property possession or document recordation. Legal notice may be a

registered letter, advertisement in a designated newspaper, telegram, or

other such method. Also known as constructive notice.



Person is defined under this Act as any individual, Corporation, Partnership,

Association, Labor Organization, Legal Representative, Mutual Stock

Company, Trustee, Receiver, fiduciary. These are all legal entities and may

act, perform the duties, and be treated as a person under the terms of this

Act.

Protected Class. A class of people who are protected from discrimination

by federal or state law.

Redlining. A lending policy, illegal in California, of denying real estate loans

on properties in older, changing urban areas, usually with large minority

populations, because of alleged higher lending risks without due

consideration being given by the lending institution to the credit worthiness

of the individual loan applicant.

Rent means to rent, lease, or otherwise allow by granting the right to a

person(s) other than the owner to occupy or use the property for

consideration.

Rent control restricts the amount a landlord can charge a long-time tenant.

Rent stabilization means rent can only increase by a small, set percentage

each year.

Retaliatory Eviction. An eviction that occurs in revenge for some

complaint made by the tenant.

Steering. The illegal practice of directing people to specific locations for

housing accommodations, depriving them of choice. Steering is a violation of

fair housing laws.



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FAIR HOUSING Chapter 2 – Incremental Assessment/Quiz


Chapter 2 – Incremental Assessment / Quiz 1. The federal case that upheld the constitutionality of the Civil Rights Act of

1866 was a. Easton v. Strassburger b. Jones v. Mayer c. Wellenkamp v. Bank of America d. Brown v. Board of Education 2. A private owner of a single family home, exempt from the Civil Rights Act of

1968, can discriminate if a. They use an agent to rent or sell the home b. They do not own more than three homes c. They own more than three homes d. They are of the same ethnic origins as the renter or buyer 3. Exclusionary zoning violates a. Civil Rights Act of 1866 and 1968 b. Federal Equal Credit Opportunity Act c. The Holden Act d. The Americans with Disabilities Act 4. The Fair Housing Amendment of 1988 modified the Federal Fair Housing Act

(1968) by prohibiting discrimination against a. students b. people over 55 years of age c. families with children

d. None of the above

5. The Civil Rights Act of 1968 lets owners set maximum occupancy of units as long as a. the limits are reasonable, such as no more than three people for a

three-bedroom house. b. the renter pays a higher security deposit. c. the rule is enforced without discrimination. d. None of the above.



6. All of the following have to display a Fair Housing poster, except a. A loan officer in a savings bank. b. A broker who specializes in multi-family housing. c. A real estate office in a subdivision. d. An owner selling her/his own property. 7. The term “steering” refers to a. advertising properties in Hispanic areas only, in newspapers aimed at Hispanic readers.

b. directing a race of people towards their own race or away from people of a different race.

c. Both a and b d. Neither a nor b 8. Which of the following practices violate the Fair Housing Laws and are

illegal? a. Claiming a dwelling is unavailable to avoid renting on basis of religion. b. Quoting higher prices to avoid renting on the basis of race. c. Advertising that discriminates on the bases of sex. d. All of the above. 9. Under federal law, a dwelling is defined as a. Any 1-to-4 unit property b. Any property where at least one family can take refuge c. Any structure or building designed or intended to be used as a

residential dwelling for one or more families. d. Any structure or building that is or can be made habitable.



Chapter 2 – Answers / Remediation

1. B - The 1968 landmark case of Jones v. Mayer, the Supreme Court upheld the validity of the Civil Rights Act of 1866. Page 15 2. B - Exemptions from the 1968 Civil Rights Act - Owners of a single family home can discriminate, provided they do not own more than three homes and do not use an agent to rent or sell the home. Page 16 3. A - Exclusionary zoning violates the Civil Rights Acts of 1866 and 1968. Page 17 4. C - The Fair Housing Amendment of 1988 modified the Federal Fair Housing Act (1968) by extending protection against housing discrimination to handicapped persons or those based on familial status (families with children). Page 18 5. C - The Civil Rights Act of 1968 lets owners set maximum occupancy of units as long as the rule is enforced without discrimination. Page 20 6. D - The Fair Housing Amendment requires brokers and lenders to prominently display the Equal Housing Opportunity poster in all brokerage offices, model home sites, lending offices, property management firms, etc. Page 22 7. C - Steering is the practice of channeling house or apartment seekers to particular areas, whether to maintain the homogeneity of an area or to change the character of an area in order to create a speculative situation. Page 24 8. D - These practices violate the Fair Housing Laws and are illegal: Advertising that discriminates on the basis of sex; Claiming a dwelling is unavailable to avoid selling or renting on the basis of race or religion; Quoting higher prices on the basis of race or religion; Prohibiting secondary financing on the basis of race or religion. Page 25 9. C - Dwelling means any structure or building that is designed or intended to

be used as a residential dwelling for one or more families. Page 26

FAIR HOUSING Chapter 3 – California Fair Housing Laws


Chapter 3 - California Fair Housing Laws

Fair Employment and Housing

The Department of Fair Employment and Housing (DFEH) is the

institutional centerpiece of California’s anti-discrimination and hate crimes

policy. The DFEH mission is to protect Californians from unlawful

discrimination in employment, housing and public accommodations and from

hate violence and human trafficking in accordance with the Fair Employment

and Housing Act, Unruh Civil Rights Act, Disabled Persons Act, and Ralph Civil

Rights Act.

Fair Employment and Housing Act (FEHA) was formerly known as the

Rumford Act. The Rumford Act was named for and influenced by Robert

Rumford who was a prominent African-American business man and politician.

Mr. Rumford was instrumental in establishing rights for minorities in the early

1900s.

The FEHA prohibits discrimination in housing to include sale, lease, or financing

in all types of housing accommodations based on:

Race

Color

Religion (includes religious dress and grooming practices)

Sex/gender (Includes pregnancy, childbirth, breastfeeding and/or

related medical conditions)

Gender identity, gender expression

Sexual orientation

Marital status

National Origin

State Laws against discrimination has additional covered issues and many

local areas in California have created laws with greater restrictions.



Ancestry

Disability- either Physical or Mental

Medical Condition

Familial Status

Source of Income

Age (over 40)

Exemption to the Rumford Act is that the owner of a single-family residence may

rent a room to ONE (1) roommate and still be exempt from this act.

Legal Remedies for Violation of the Rumford Act - An injured person

who feels there is a violation of any part of this act may file a complaint up to

one year from the date of the occurrence with the Department of Fair

Employment and Housing. In addition to filing with the Department of Fair

Employment and Housing, the injured party may also file an action under any

other federal or state law. Once the complaint is filed, it will be investigated.

If a violation is verified, the owner may be ordered to sell the home or rent

the unit to the complainant if it is still available. If the home has been sold or

if the rental unit is no longer available, the owner must make the next

vacancy available, or pay a civil penalty up to $16,000 in damages if either of

the above remedies is not possible. In addition, the complainant may receive

actual damages.

Unruh Civil Rights Act

Unruh Civil Rights Act prohibits discrimination in accommodations and

business establishments such as hotels. This Act includes all of the

prohibitions in the FEHA. Discrimination is prohibited in all areas of housing

accommodations against all categories covered by the FEHA.



The Unruh Act applies to real estate offices because it prohibits

discrimination in all business establishments. Any business involving real

estate activity i.e., brokerage, property management, condo association,

mortgage lending, development, leasing, etc. must comply with this act.

Therefore it would apply to all real estate brokers and their sales associates,

and anyone managing an apartment building or other real estate related

business.

Protected Classes - Basically the same groups under the Federal Fair

Housing Act are protected by this act. The Unruh Act states, "All persons

within the jurisdiction of this state are free and equal, and no matter what

their sex, color, race, religion, ancestry, national origin, or disability are

entitled to the full and equal accommodations, advantages, facilities,

privileges, or services in all business establishments of every kind

whatsoever." A violation of the right of any individual under the Americans

with Disabilities Act of 1990 is a violation of the Unruh Act.

In the case of Unruh Harris v. Capital Growth Investors XIV, a landlord

had a minimum-income policy for rentals. He required a gross income of

at least three times the rent. The plaintiff claimed that the policy

arbitrarily discriminated against people with lower income regardless of

their actual ability to pay and that it discriminated against women

because of disparate earnings. Does this income test violate the Unruh

Act?

The court decided that the income test did not violate the Unruh Act. In

fact, the court approved economic discrimination if it was evenly applied

to all rental applications. It affirms the right of the landlord to apply

reasonable income-to-rental requirements.



Cases Extending the Unruh Act - In 1982, the Unruh Act was extended to

prohibit discrimination based on sexual preference and any arbitrary age

discrimination, with the exception of housing for seniors.

Sexual Preference

The Unruh Act was extended to protect sexual preference by the court case,

Hubert v. Williams. A landlord evicted a quadriplegic from the complex

because she believed that the quadriplegic's 24-hour-a-day attendant was a

lesbian and the quadriplegic associated with homosexuals.

The court ruled in favor of the plaintiff because homosexuals are a protected

group, therefore, any person who associates with this protected group

should also be protected.

Arbitrary Age Discrimination

In the case of Marina Point, Ltd. v. Wolfson, the management tried to evict a

couple who had a child. The impact of this case is that renting units in adult-

only complexes and designating family-areas becomes illegal.

The California Supreme Court held that the anti-discrimination provisions of

the Unruh Civil Rights Act are designed to protect all persons from any

arbitrary discrimination by a business, not just the limited category of a few

protected classes.

In Smith v. Ring Bros. Management Corp., a landlord had a rental policy

allowing two adults and two children to occupy an apartment only if the

second child was born after the family had taken possession. Is the

landlord's policy proper?

The court held the policy was discriminatory because it discriminated

between children in contemplation over children in existence. The court

ruled it violated a Los Angeles Municipal Code. His discriminatory practice

also violated the Unruh and Rumford Acts as well as the 1988 Amendment to

the Civil Rights Act of 1968.



Exemptions From the Unruh Act - There is a basic prohibition against

arbitrary age discrimination in housing--with the exception of housing

developments which are designed to meet the physical, social and other

special needs of senior citizens.

Senior Citizen Housing varies depending on its location. If it is in a

large metropolitan area it must have at least 150 or more units. If not, it

must have at least 35 units. Regardless of the size, the property must be

developed or substantially renovated for senior citizens. The law does

not apply to mobile home parks.

Specific Age Criterion for a senior citizen retirement community was

established in 1985. A "senior citizen is a person 62 years of age or older,

or 55 years of age or older in a senior citizen housing development."

Legal Remedies for Violation of the Unruh Act - An aggrieved person

would file action in civil court. Any person who violates the Unruh Act would

be liable for each and every offense for the actual damages, and any amount

that may be determined by a jury, or a court sitting without a jury, up to a

maximum of three times the amount of actual damage but in no case less

than four thousand dollars ($4,000). In addition, anyone who is intimidated

or suffers any violence can be awarded $25,000 plus attorney's fees.

Blockbusting is the discriminatory act of attempting to cause panic selling

in a neighborhood. This is done by spreading rumors that people of a

different race or another group such as those of different religious beliefs

than the predominant socio-economic occupants of the neighborhood. This

is an illegal act under the FEHA and is punishable by loss of Real Estate

License, fines, and/or imprisonment.



Civil Rights Housing Act of 2006 became effective January 1, 2007 The

Act allows for automatic updates as additional areas of discrimination in

housing and housing related areas become apparent and a need is proven. This

Act extends the FEHA to prohibit discrimination in housing and housing related

areas which include:

Real Estate Licensing

Mortgage Lending

Club membership established by Condo Associations

Housing Developments

Mobile Home Parks

Community Re-Development

Sale, Rental, or Lease of Residential Real Estate

Sale, Rental, or Lease of Residential Real Estate is covered under the

Fair Housing Act by making it unlawful for any person engaged in the activity to

discriminate against any potential client based on race, color, national origin,

religion, sex, familial status, or disability.

A Real Estate Broker, Agent, or Salesperson must not refuse to show

property whether for sale, rent, or lease.

It is unlawful to refuse to accept a bona fide offer or to refuse to negotiate

for the sale or rental of a residential dwelling.

Fair Housing is not an option, it is the law.



Sales prices cannot be increased to discourage purchases by covered

groups and Appraisals cannot be tampered with to discourage a purchase or

sale of Real Property. The amount of rent likewise cannot be increased to

discourage a party from renting, or decreased to give preferential treatment

to another party.

It is unlawful to engage in any act which applies to housing provisions

and results in a party being denied or unable to obtain a property based on

discrimination. Terms may not be changed for a property offered for sale or

for rent/lease to make the property more desirable for one party or less

desirable for another based on race, color, national origin, religion, sex,

familial status, or disability.

Lease terms may not vary, or require different or more stringent terms

including an increased amount of security deposit based on any if the

covered groups.

Advertising whether written or verbal may not include any discriminatory

statements regarding the acceptability, preference, limitations, or

discrimination of a person or party. Advertising may not include any

representation that a property is not available when in fact it is.

Steering is a term used to describe the discriminatory act of directing

clients either to or from a particular neighborhood based on any of the

covered categories. It is unlawful to restrict or attempt to influence the

choices of a person by word or conduct in connection with housing that will

perpetuate or affect the make-up of a neighborhood, community, or a

housing development through segregation or discriminatory acts.

Example 1: A client is told that there are no houses available in a

desired neighborhood. There are in fact houses available for sale or

lease; however the Agent has been asked not to show those properties

to clients of certain races.



Example 2: A client is shown only houses that are available in

neighborhoods that are predominantly occupied by others of their

own category.

Exemptions to the law or situations where the Fair Housing Act may not

apply in the sale or rental of housing are:

Religious organization, association, or society or any related

non-profit institution which owns or operates for other than

commercial purpose may not limit occupancy or give preference of

such property to persons of the same religion unless the religion

membership is restricted based on race, color, or national origin.

Private Club that is not open to the public and provides lodgings for

its members only, or giving preference to its members, and not for

commercial purpose.

Limitations by local, State, or Federal restrictions regarding the

maximum occupancy permitted in a dwelling.

Prohibition of a party that has been convicted of the illegal

manufacture or distribution of a controlled substance.

Sale or rental of a single family house by an owner provided

the following conditions are met:

o The owner does not own or have interest in more than 3 single

family houses at one time.

o The house is sold or rented without the use of a professional Real

estate Broker, Agent, or Salesperson or the facilities of any person

in the business of selling or renting Real Estate.

If the owner that is selling the property does not reside in it at

the time of the sale or was not the most recent occupant, this

exemption only applies once in any 24-month period.



o The owner occupies one of the units or the residence of a one-to –

four-unit residential dwelling.

Single-family dwelling/house in which the owner lives and is

renting rooms.

2- to 3-unit residential property where the owner occupies one

of the units.

Housing for older persons applies to housing that is

o Designed to accommodate the needs of an elderly person or

o Intended and operated for persons 55 years of age and older

o At least 80% occupied by at least one person that is at least 55

years of age

o The facility or community publishes and adheres to policies and

procedures specifically applying to seniors

o The facility or community complies with rules issued by HUD

classifying the property for senior housing

FAIR HOUSING Chapter 3 – Incremental Assessments/Quiz


Chapter 3 – Incremental Assessment / Quiz 1. The California FEHA was formerly known as a. Williams Civil Rights Act b. Rumford Act c. FHLMC d. None of the above 2. The Unruh Civil Rights Act prohibits discrimination in/against a. Business establishments b. Public streets c. Multi-family properties d. Public parks 3. In 1982 the Unruh Act was extended to protect sexual preference by the court case a. Smith v. Ringling Brothers b. Jones v. Mayer c. Hubert v. Williams d. None of the above 4. With regards to the Unruh Act specified age criterion, a senior citizen is defined as a person a. 62 years of age or older. b. 55 years of age or older in a senior citizen housing development. c. Both a and b d. Neither a nor b 5. It is unlawful to engage in any act which applies to housing provisions and results in a party being denied or unable to obtain property based on a. Credit interpretation b. Income source c. Property assessment d. Discrimination 6. Exemptions to the Federal Fair Housing Act apply to a. Religious organizations, private clubs, and senior complexes b. Sale or lease of a unit by the property owner c. Persons convicted of a misdemeanor d. No exemptions allowed

FAIR HOUSING Chapter 3 – Incremental Assessments/Quiz


Chapter 3 – Answers/Remediation

1. B - Fair Employment and Housing Act (FEHA) was formerly known as the Rumford Act. Page 32 2. A - Unruh Civil Rights Act prohibits discrimination in accommodations and business establishments. Page 33

3. C - In 1982 the Unruh Act was extended to protect sexual preference by the court case, Hubert v. Williams. Page 35 4. C - A senior citizen is a person 62 years of age or older, or 55 years of age or older in a senior citizen housing development. Page 36 5. D - It is unlawful to engage in any act which applies to housing provisions and results in a party being denied or unable to obtain a property based on discrimination. Page 38 6. A - Exemptions to the law are: Religious organization, association, or society

or any related non-profit institution; Private Club; Housing for older persons. Page

39-40

FAIR HOUSING Chapter 4 – California Business and Professions Code


Chapter 4 - California Code and Regulations

California Business and Professions Code

A California real estate licensee's behavior is governed by the Business and

Professions Code as well as the federal and state fair housing laws previously

discussed. Violation of these sections of the Business and Professions Code will

place the license of the broker or salesperson in jeopardy and may lead to

disciplinary action.

Disciplinary Provisions for Discriminatory Acts - Every person who holds

a license under the provisions of the Business and Professions Code is subject to

disciplinary action if he or she refuses to perform the licensed activity or makes

any discrimination or restriction in the performance of the licensed activity

because of an applicant's race, color, sex, religion, ancestry, disability, marital

status, or national origin.

Inducement to Panic Selling is also called blockbusting or panic peddling.

This section prohibits the inducement to sell, lease or list property on the basis

that there will be a loss of value, increase in crime, or decline of the quality of the

schools, due to the presence or prospective entry into the neighborhood of a

person(s) of another race, color, religion, ancestry or national origin.

Penalties - Any person, who willfully or knowingly participates in blockbusting,

is guilty of a misdemeanor punishable by fine not to exceed $10,000, by

imprisonment in the county jail not to exceed six months, or by both fine and

imprisonment.



California Real Estate Commissioner’s Regulations

Article 10 - Discrimination and Panic Selling

Regulations 2780 and 2781 contained within Article 10, list the

discriminatory conduct which will be the basis for disciplinary action that could

result in suspension or revocation of the real estate license. Licensees must be

color blind in their relations with owners as well as prospective buyers and

tenants.

Discriminatory Conduct - Regulation 2780 lists prohibited discriminatory

conduct by real estate licensees based on race, color, sex, religion, ancestry,

physical handicap, marital status or national origin (referred to as protected

classes). The following conduct is prohibited.

a) Refusing to negotiate for the sale, rental or financing of the purchase of real

property or otherwise making unavailable or denying real property to any

person because of such person’s race, color, sex, religion, ancestry, physical

handicap, marital status or national origin.

b) Refusing or failing to show, rent, sell or finance the purchase of real property

to any person or refusing or failing to provide or volunteer information to

any person about real property, or channeling or steering any person away

from real property, because of that person’s race, color, sex, religion,

ancestry, physical handicap, marital status or national origin or because of

the racial, religious, or ethnic composition of any occupants of the area in

which the real property is located.

It shall not constitute discrimination under this subdivision for a real estate

licensee to refuse or fail to show, rent, sell or finance the purchase of real

property to any person having a physical handicap because of the presence of

hazardous conditions or architectural barriers to the physically handicapped

which conform to applicable state or local building codes and regulations.



c) Discriminating because of race, color, sex, religion, ancestry, physical

handicap, marital status or national origin against any person in the sale or

purchase or negotiation or solicitation of the sale or purchase or the

collection of payment or the performance of services in connection with

contracts for the sale of real property or in connection with loans secured

directly or collaterally by liens on real property or on a business opportunity.

Prohibited discriminatory conduct by a real estate licensee under this

subdivision does not include acts based on a person’s marital status which

are reasonably taken in recognition of the community property laws of this

state as to the acquiring, financing, holding or transferring of real property.

d) Discriminating because of race, color, sex, religion, ancestry, physical

handicap, marital status or national origin against any person in the terms,

conditions or privileges of sale, rental or financing of the purchase of real

property.

This subdivision does not prohibit the sale price, rent or terms of a housing

accommodation containing facilities for the physically handicapped to differ

reasonably from a housing accommodation not containing such facilities.

e) Discriminating because of race, color, sex, religion, ancestry, physical

handicap, marital status or national origin against any person in providing

services or facilities in connection with the sale, rental or financing of the

purchase of real property, including but not limited to: processing

applications differently, referring prospects to other licensees because of the

prospects’ race, color, sex, religion, ancestry, physical handicap, marital

status or national origin, using with discriminatory intent or effect, codes or

other means of identifying minority prospects, or assigning real estate

licensees on the basis of a prospective client’s race, color, sex, religion,

ancestry, physical handicap, marital status or national origin.







f) Representing to any person because of his or her race, color, sex, religion,

ancestry, physical handicap, marital status or national origin that real

property is not available for inspection, sale or rental when such property is

in fact available.

g) Processing an application more slowly or otherwise acting to delay, hinder or

avoid the sale, rental or financing of the purchase of real property on account

of the race, color, sex, religion, ancestry, physical handicap, marital status or

national origin of a potential owner or occupant.

h) Making any effort to encourage discrimination against persons because of

their race, color, sex, religion, ancestry, physical handicap, marital status or

national origin in the showing, sale, lease or financing of the purchase of real

property.

i) Refusing or failing to cooperate with or refusing or failing to assist another

real estate licensee in negotiating the sale, rental or financing of the purchase

of real property because of the race, color, sex, religion, ancestry, physical

handicap, marital status or national origin of any prospective purchaser or

tenant.

j) Making any effort to obstruct, retard or discourage the purchase, lease or

financing of the purchase of real property by persons whose race, color, sex,

religion, ancestry, physical handicap, marital status or national origin differs

from that of the majority of persons presently residing in a structural

improvement to real property or in an area in which the real property is

located.

k) Performing any acts, making any notation, asking any questions or making or

circulating any written or oral statement which when taken in context,

expresses or implies a limitation, preference or discrimination based upon

race, color, sex, religion, ancestry, physical handicap, marital status or

national origin; provided, however, that nothing herein shall limit the

administering of forms or the making of a notation required by a federal,

state or local agency for data collection or civil rights enforcement purposes;

or in the case of a physically handicapped person, making notation, asking

questions or circulating any written or oral statement in order to serve the

needs of such a person.



l) Making any effort to coerce, intimidate, threaten or interfere with any person

in the exercise or enjoyment of, or on account of such person’s having

exercised or enjoyed, or on account of such person’s having aided or

encouraged any other person in the exercise or enjoyment of any right

granted or protected by a federal or state law, including but not limited to:

assisting in any effort to coerce any person because of his or her race, color,

sex, religion, ancestry, physical handicap, marital status or national origin to

move from, or to not move into, a particular area; punishing or penalizing

real estate licensees for their refusal to discriminate in the sale or rental of

housing because of the race, color, sex, religion, ancestry, physical handicap,

marital status or national origin of a prospective purchaser or lessee; or

evicting or taking other retaliatory action against any person for having filed

a fair housing complaint or for having undertaken other lawful efforts to

promote fair housing.

m) Soliciting of sales, rentals or listings of real estate from any person, but not

from another person within the same area because of differences in the race,

color, sex, religion, ancestry, physical handicap, marital status or national

origin of such persons.

n) Discriminating because of race, color, sex, religion, ancestry, physical

handicap, marital status or national origin in informing persons of the

existence of waiting lists or other procedures with respect to the future

availability of real property for purchase or lease.

o) Making any effort to discourage or prevent the rental, sale or financing of the

purchase of real property because of the presence or absence of occupants of

a particular race, color, sex, religion, ancestry, physical handicap, marital

status or national origin, or on the basis of the future presence or absence of

a particular race, color, sex, religion, ancestry, physical handicap, marital

status or national origin, whether actual, alleged or implied.

p) Making any effort to discourage or prevent any person from renting,

purchasing or financing the purchase of real property through any

representations of actual or alleged community opposition based upon race,

color, sex, religion, ancestry, physical handicap, marital status or national

origin.



q) Providing information or advice to any person concerning the desirability of

particular real property or a particular residential area(s) which is different

from information or advice given to any other person with respect to the

same property or area because of differences in the race, color, sex, religion,

ancestry, physical handicap, marital status or national origin of such persons.

This subdivision does not limit the giving of information or advice to

physically handicapped persons for the purpose of calling to the attention of

such persons the existence or absence of housing accommodation services or

housing accommodations for the physically handicapped.

r) Refusing to accept a rental or sales listing or application for financing of the

purchase of real property because of the owner’s race, color, sex, religion,

ancestry, physical handicap, marital status or national origin or because of

the race, color, sex, religion, ancestry, physical handicap, marital status or

national origin of any of the occupants in the area in which the real property

is located.

s) Entering into an agreement, or carrying out any instructions of another,

explicit or understood, not to show, lease, sell or finance the purchase of real

property because of race, color, sex, religion, ancestry, physical handicap,

marital status or national origin.

t) Making, printing or publishing, or causing to be made, printed or published,

any notice, statement or advertisement concerning the sale, rental or

financing of the purchase of real property that indicates any preference,

limitation or discrimination because of race, color, sex, religion, ancestry,

physical handicap, marital status or national origin, or any intention to make

such preference, limitation or discrimination.

This subdivision does not prohibit advertising directed to physically

handicapped persons for the purpose of calling to the attention of such

persons the existence or absence of housing accommodation services or


u) Using any words, phrases, sentences, descriptions or visual aids in any

notice, statement or advertisement describing real property or the area in

which real property is located which indicates any preference, limitation or



discrimination because of race, color, sex, religion, ancestry, physical

handicap, marital status or national origin.

This subdivision does not prohibit advertising directed to physically

handicapped persons for the purpose of calling to the attention of such

persons the existence or absence of housing accommodation services or


v) Selectively using, placing or designing any notice, statement or

advertisement having to do with the sale, rental or financing of the purchase

of real property in such a manner as to cause or increase discrimination by

restricting or enhancing the exposure or appeal to persons of a particular

race, color, sex, ancestry, physical handicap, marital status or national origin.

This subdivision does not limit in any way the use of an affirmative

marketing program designed to attract persons of a particular race, color,

sex, religion, ancestry, physical handicap, marital status or national origin

who would not otherwise be attracted to the real property or to the area.

w) Quoting or charging a price, rent or cleaning or security deposit for a

particular real property to any person which is different from the price, rent

or security deposit quoted or charged to any other person because of

differences in the race, color, sex, religion, ancestry, physical handicap,

marital status or national origin of such persons.

This subdivision does not prohibit the quoting or charging of a price, rent or

cleaning or security deposit for a housing accommodation containing

facilities for the physically handicapped to differ reasonably from a housing

accommodation not containing such facilities.

x) Discriminating against any person because of race, color, sex, religion,

ancestry, physical handicap, marital status or national origin in performing

any acts in connection with the making of any determination of financial

ability or in the processing of any application for the financing or refinancing

of real property.

Nothing herein shall limit the administering of forms or the making of a

notation required by a federal, state or local agency for data collection or civil

rights enforcement purposes. In any evaluation or determination as to

whether, and under what terms and conditions, a particular lender or



lenders would be likely to grant a loan, licensees shall proceed as though the

lender or lenders are in compliance with Sections 35800 through 35833 of

the California Health and Safety Code (The Housing Financial Discrimination

Act of 1977).





y) Advising a person of the price or value of real property on the basis of factors

related to the race, color, sex, religion, ancestry, physical handicap, marital

status or national origin of residents of an area or of residents or potential

residents of the area in which the property is located.

z) Discriminating in the treatment of, or services provided to, occupants of any

real property in the course of providing management services for the real

property because of the race, color, sex, religion, ancestry, physical handicap,

marital status or national origin of said occupants.

This subdivision does not prohibit differing treatment or services to a physically handicapped person because of the physical handicap in the course of providing management services for a housing accommodation.

aa) Discriminating against the owners or occupants of real property because of

the race, color, sex, religion, ancestry, physical, handicap, marital status or

national origin of their guests, visitors or invitees.

bb) Making any effort to instruct or encourage, expressly or impliedly, by either

words or acts, licensees or their employees or other agents to engage in any

discriminatory act in violation of a federal or state fair housing law.

cc) Establishing or implementing rules that have the effect of limiting the

opportunity for any person because of his or her race, color, sex, religion,

ancestry, physical handicap, marital status or national origin to secure real

property through a multiple listing or other real estate service.



dd) Assisting or aiding in any way, any person in the sale, rental or financing of

the purchase of real property where there are reasonable grounds to believe

that such person intends to discriminate because of race, color, sex, religion,

ancestry, physical handicap, marital status or national origin.

Regulation 2781 - Panic Selling as the Basis for Disciplinary Action.

Prohibited discriminatory conduct includes, but is not limited to, soliciting

sales or rental listings, making written or oral statements creating fear or

alarm, transmitting written or oral warnings or threats, or acting in any other

manner so as to induce or attempt to induce the sale or lease of real property

through any representation, express or implied, regarding the present or

prospective entry of one or more persons of another race, color, sex, religion,

ancestry, marital status or national origin into an area or neighborhood.

Duty to Supervise

A broker licensee shall take reasonable steps to be familiar with, and to

familiarize his or her sales associates with the requirements of federal and state

laws pertaining to prohibition of discrimination in the sale, rental or financing of

real property. A broker is required to be familiar with all of the laws and

regulations in this booklet to include, but not limited to:

Fair Employment and Housing Act (Rumford Act)

Unruh Civil Rights Act

Federal Fair Housing Act

Housing Financial Discrimination Act of 1977 (Holden Act)

Blind and Other Physically Disabled Persons

Ralph Civil Rights Act



Chapter 4 – Incremental Assessment/Quiz

1. In regards to unlawful discrimination, the duties of a real estate agent are

explained in which Commissioners Regulations? a. §1411 and §1502 b. §2780 and §2781 c. §2870 and §2871 d. §A278 and §B278 2. Regulation 2780 lists prohibited discriminatory conduct based on race, color,

sex, religion, ancestry, physical handicap, marital status or national origin are also referred to as

a. The Golden Eight b. Safeguard list c. Protected classes d. All of the above 3. Under Regulation 2780; which discriminatory conduct is prohibited? a. Processing an application more slowly. b. Refusing to cooperate with another real estate licensee to negotiate a

sale. c. Making an effort to encourage discrimination. d. All of the above.

4. Entering into an agreement not to ___________________the purchase of real

property because of race, color, sex, religion, ancestry, physical handicap,

marital status or national origin.

a. sell or show

b. lease or finance

c. Both a & b

d. Neither a nor b

5. Prohibited discriminatory conduct by a real estate licensee under Regulation

2780 (x) subdivision does not include acts based on a(n)

a. natural disaster

b. person’s marital status

c. estate for life

d. None of the above



6. The requirement for a Broker to be familiar with federal and state laws

pertaining to prohibited discriminatory acts is his/her

a. Duty to supervise

b. Right to sell

c. Obligation to real property

d. All of the above



Chapter 4 –Answers/ Remediation

1. B - Regulations 2780 and 2781 contained within Article 10, list the

discriminatory conduct which will be the basis for disciplinary action that could

result in suspension or revocation of the real estate license. Page 44

2. C - Regulation 2780 lists prohibited discriminatory conduct by real estate

licensees based on race, color, sex, religion, ancestry, physical handicap, marital

status or national origin (referred to as protected classes). Page 44

3. D - All of the above are correct under Regulation 2780: (g) processing an

application more slowly to delay the purchase of real property; (h) making any

effort to encourage discrimination; (i) Refusing to cooperate with another real

estate licensee in the purchase of real property. Page 46

4. C - (s) Entering into an agreement, or carrying out any instructions of

another, explicit or understood, not to show, lease, sell or finance the purchase of

real property because of race, color, sex, religion, ancestry, physical handicap,

marital status or national origin. Page 48

5. B - Prohibited discriminatory conduct by a real estate licensee under this

subdivision does not include acts based on a person’s marital status. Page 50

6. A - With a duty to supervise, a broker licensee shall take reasonable steps to

be familiar with, and to familiarize his or her sales associates with the requirements

of federal and state laws pertaining to prohibition of discrimination. Page 51

FAIR HOUSING Chapter 5 – Fair Lending Laws


Chapter 5 - Fair Lending Laws

The Federal Equal Credit Opportunity Act (ECOA), as part of the Consumer

Protection Act, was enacted in 1975 to protect consumers from discriminatory

lending practices. Its purpose is to assure that all qualified credit applicants

have equal access to credit. Lenders must apply the credit guidelines to each

prospective borrower in a uniform manner. Information required on the credit

application cannot be discriminatory in nature. The ECOA prohibits lenders

from discrimination against credit applicants on the basis of race or color,

religion, national origin, sex, marital status, age or dependency on public

assistance.

Discrimination

Race Discrimination - Lenders are prohibited from asking a person's race on a

credit application except in one instance. A lender is required to ask a person's

race for the sole purpose of monitoring home mortgage applications. It would be

naive to assume that race discrimination has disappeared simply because it is

prohibited. Lenders are accused of getting around race discrimination by

redlining (denying credit to residents of certain minority neighborhoods).

National Origin Discrimination - Even though a non-permanent resident

may be denied credit, discrimination is not prohibited by the ECOA.

Sex Discrimination - A creditor may ask your sex when you apply for a real

estate loan since this information is collected by the federal government Home

Mortgage Disclosure Act (HMDA) for statistical purposes. A creditor cannot

deny credit to a woman or offer less favorable terms than they would give a man

with the same income and property.

Federal and state laws not only cover discrimination in selling,

renting and leasing, but also financing residential real property.



Examples of prohibited sex discrimination include:

Rating female-specific jobs (such as waitress) lower than male-specific jobs

(such as waiter) for the purpose of obtaining credit.

Asking about birth control practices if a person plans to have children.

Denying credit because an applicant's income comes from sources

historically associated with women, i.e., part-time jobs, alimony or child

support.

Requiring married women, who apply for credit alone, to provide

information about their husbands while not requiring married men to

provide information about their wives.

Marital Status Discrimination - A married woman must be allowed to apply

for credit in only her name. A creditor cannot require an applicant's spouse to

co-sign an application. Lenders may ask if a person is married, unmarried or

separated. They may not inquire if the applicant is divorced or widowed. The

term unmarried refers to single, divorced or widowed person. Lenders may not

ask if a person receives alimony or child support unless the applicant intends to

use it to qualify for the loan. However, a lender may ask if a person pays alimony

or child support. Unless the applicant plans to use income from a spouse (or ex-

spouse), lenders cannot request this information. Lenders must report credit

information on married couples separately in the name of each spouse.

The prohibition against marital status discrimination means that a creditor must

consider the combined incomes of an unmarried couple applying for a joint

obligation.

Age Discrimination - This is meant to protect the elderly.

Exclusion of Income - Income cannot arbitrarily be excluded because of its

source, i.e., public assistance, disability pay, etc. A creditor may ask about the

source of income, but only to determine the likelihood of continued income.



Denial of Credit or Change of Terms - If a creditor denies credit, changes the

terms of the credit arrangement, or revokes existing credit, the creditor must

inform the applicant that the applicant can request a written explanation.

Within 60 days of being denied credit, the person must request the creditor to

send a written explanation. The creditor has 30 days to respond to your request.

Remedies for Non-Compliance - Any person who feels that a creditor has

discriminated against him or her under the provisions of the ECOA would file a

complaint with the Federal Trade Commission. The injured party can sue for

actual damages, punitive damages up to $10,000, court costs and attorney fees.

These are in addition to any remedies sought under HMDA, or other Fair

Housing Laws.

Consumer Credit

Consumer Credit Reports are prepared by one of three major credit bureaus--

Equifax, Trans Union and Experian. Credit bureaus are regulated by the Federal

Trade Commission under the Fair Credit Reporting Act (FCRA) and the California

Civil Code. The laws were passed to stop inaccurate or obsolete information

from staying in a file, and require the credit bureaus to establish reasonable

procedures for maintaining the files.

The law allows credit bureaus to gather information regarding your credit

worthiness, credit standing, character, or mode of living as it relates to your

eligibility for credit. It also allows the information in your file to be given to

anyone who intends to use it for any legitimate business need.

California's laws limit the credit bureau's activities and increase consumer's

rights. For example, a consumer has the right to receive a copy of the file within

five days of receiving the request. The consumer has the right to challenge any

incorrect information and have it removed.



Enforcement of Consumer Credit Laws - If a credit bureau violates the law,

you can file a complaint with:

Federal Trade Commission Consumer Response Center-FCRA Washington, DC 20580 877-382-4357 www.ftc.gov/credit

Remedies for Unauthorized Access to Credit Files - California law allows a

consumer to bring action for a civil penalty, not to exceed $2,500 against any

person who knowingly and willfully obtains access to and/or data from the

consumer report without a permissible purpose.

Summary of Creditor's Rights

California Residents - The federal Fair Credit Reporting Act (FCRA)

promotes the accuracy, fairness, and privacy of information in the files of

consumer reporting agencies. There are many types of consumer reporting

agencies, including credit bureaus and specialty agencies (such as agencies that

sell information about check writing histories, medical records, and rental

history records).

You must be told if information in your file has been used against

you. Anyone who uses a credit report or another type of consumer report to

deny your application for credit, insurance, or employment – or to take

another adverse action against you – must tell you, and must give you the

name, address, and phone number of the agency that provided the

information.

http://www.ftc.gov/credit



You have the right to know what is in your file. You may request and

obtain all the information about you in the files of a consumer reporting

agency (your “file disclosure”). You will be required to provide proper

identification, which may include your Social Security number. In many

cases, the disclosure will be free. You are entitled to a free file disclosure if:

o a person has taken adverse action against you because of information in

your credit report;

o you are the victim of identity theft and place a fraud alert in your file;

o your file contains inaccurate information as a result of fraud;

o you are on public assistance;

o you are unemployed but expect to apply for employment within 60 days.

In addition, by September 2005 all consumers will be entitled to one free

disclosure every 12 months upon request from each nationwide credit

bureau and from nationwide specialty consumer reporting agencies.

You have the right to ask for a credit score. Credit scores are numerical

summaries of your credit-worthiness based on information from credit

bureaus. You may request a credit score from consumer reporting agencies

that create scores or distribute scores used in residential real property loans,

but you will have to pay for it. In some mortgage transactions, you will

receive credit score information for free from the mortgage lender.

You have the right to dispute incomplete or inaccurate information.

If you identify information in your file that is incomplete or inaccurate, and

report it to the consumer reporting agency, the agency must investigate

unless your dispute is frivolous.

Consumer reporting agencies must correct or delete inaccurate,

incomplete, or unverifiable information. Inaccurate, incomplete or

unverifiable information must be removed or corrected, usually within 30

days. However, a consumer reporting agency may continue to report

information it has verified as accurate.



Consumer reporting agencies may not report outdated negative

information. In most cases, a consumer reporting agency may not report

negative information that is more than seven years old, or bankruptcies that

are more than 10 years old.

Access to your file is limited. A consumer reporting agency may provide

information about you only to people with a valid need -- usually to consider

an application with a creditor, insurer, employer, landlord, or other business.

The FCRA specifies those with a valid need for access.

You must give your consent for reports to be provided to employers.

A consumer reporting agency may not give out information about you to

your employer, or a potential employer, without your written consent given

to the employer.

You may limit “prescreened” offers of credit and insurance you get

based on information in your credit report. Unsolicited “prescreened”

offers for credit and insurance must include a toll-free phone number you

can call if you choose to remove your name and address from the lists these

offers are based on. You may opt-out with the nationwide credit bureaus at

1-888-5-OPTOUT (1-888-567-8688).

You may seek damages from violators. If a consumer reporting agency,

or, in some cases, a user of consumer reports or a furnisher of information to

a consumer reporting agency violates the FCRA, you may be able to sue in

state or federal court.



Redlining

Redlining is an illegal lending policy of denying real estate loans on properties

in older, changing urban areas, usually with large minority populations, because

of alleged higher lending risks, without due consideration being given by the

lending institution to the credit worthiness of the individual loan applicant.

Redlining is barred by the federal and state Fair Housing Acts, the

Commissioner's Regulations, the Business and Professions Code, the Home

Mortgage Disclosure Act, and by the Housing Financial Discrimination Act of

1977.

Home Mortgage Disclosure Act (HMDA) of 1975 prohibits redlining.

Lenders must maintain and disclose their lending practices to the Federal

Reserve relating to income levels, racial characteristics and the gender of

mortgage applicants. This includes loans originated as well as applications

rejected. This information cannot be used to discriminate when reviewing the

loan application.

Housing Financial Discrimination Act of 1977 also called the Holden Act

prohibits financial institutions from engaging in discriminatory loan activities or

practices. Activities covered under this act include awarding building,

improvement, purchase or refinancing loans using the criteria of race, color,

national origin, ancestry, sex, religion or marital status. Discrimination based on

the ethnic composition of the area surrounding a property (redlining) is also

illegal.

The Holden Act applies to owner-occupied residences of one to four units.

Financial assistance cannot be denied because of ethnic composition, condition

characteristics or expected trends in the neighborhood surrounding the subject

property. This Act encourages increased lending in areas where, in the past,

financing has been unavailable.

Complaints of discrimination under the Holden Act should be filed with the

Secretary for Business, Transportation, and Housing. The Secretary has 30

days from the date of receiving any complaint to act on it by investigating and



responding. When incidences of discrimination are discovered or proven the

following remedies are available depending on the extent of the discriminatory

act and the damages resulting from the acts:

Provide the requested loan

Offer better loan terms

Monetary damages up to $1,000

Appeals may be presented to the Office of Administrative Hearings and the

then to a court for a decision to overturn the Secretary’s decision. Lenders are

required to provide Borrowers with notification that this law exists and they

have rights under the law. They must also provide the necessary information to

file a complaint.

Discrimination in Brokerage Services

Discrimination in Brokerage Services is a violation of the Fair Housing

Act for any person in the business of Real Estate as a Broker, Agent, Salesperson,

Lender, or Appraiser to discriminate against another person in the Real Estate

Industry based on race, color, religion, national origin, sex, familial status, or

handicap.

Any person in the business may not block or disallow the ability of

another in the business from performing their duties based on discrimination

under any of the protected groups during the process of normal business

practice.

A Real Estate Agent may not be prevented from showing properties listed for

sale or for lease by another Real Estate Agent based on any of the protected

groups.

A Mortgage Broker may not speak in a defamatory way about another Broker,

Agent, Mortgage Loan Originator (MLO), Real Estate Agent or Appraiser based

on discrimination.



A Lender may not refuse business from a Mortgage Broker, MLO, or Appraiser

based on discrimination.

Predatory Lending

Predatory Lending is a term that has become a common-place expression

used to describe the abusive practices of unethical persons in the mortgage

industry. The term was coined to describe lending abuses.

Many of the abuses have been directed at some of the protected groups under

the Fair Housing Act either as an act of discrimination or taking advantage of the

Buyer’s or Borrower’s situation and the possible inability to make the proper

decision.

The term predatory lending describes practices of deception, fraud, unfairness,

and discrimination perpetrated by various parties in the mortgage industry for

the purpose of making money or gaining property. There have been many

unethical and improper acts being practiced by Brokers, MLOs, Lenders, Closers,

Appraiser, and consumers.

Various State and Federal laws cover the different practices that fall under the

term predatory lending; however there is no one law that directly covers the

general act of predatory lending.

Some of the abusive practices that fall under the predatory lending term are as

follows:

Failure to disclose terms and conditions

Altering documentation

Failure to notify Borrowers that loan terms are negotiable

Charging higher fees and rates when the loan file is not justified as a high-

risk loan based on credit-worthiness and guidelines as one would be

under the “risk-based pricing” parameters

Requiring insurance that is unnecessary for the Lender’s guidelines such

as requiring Credit Life or Single-Premium Credit Insurance.



Chapter 5 – Incremental Assessment/Quiz

1. The Federal Equal Credit Opportunity Act (ECOA), as part of the Consumer

Protection Act, was enacted in 1975 to

a. help the federal government balance the budget.

b. protect consumers from discriminatory lending practices.

c. assist credit bureaus in lending only to heterosexuals.

d. None of the above.

2. A creditor may ask about the borrower’s source of income, but only to

a. verify the accuracy of an employer’s payroll records.

b. determine marital status.

c. determine the likelihood of continued income.

d. All of the above.

3. The law allows credit bureaus to gather information regarding your a. credit standing b. credit worthiness c. character d. All of the above. 4. Under the Fair Credit Reporting Act (FCRA) you have the right to a. know what is in your file. b. dispute incomplete or inaccurate information. c. know access to your file is limited. d. All of the above 5. Complaints of discrimination under the Holden Act should be filed with a. Secretary of State b. Secretary for Business, Transportation, and Housing c. DRE d. District Attorney 6. Which of the following is NOT a predatory lending practice? a. Notifying borrowers that loan terms are negotiable. b. Altering Documents. c. Failure to disclose terms and conditions. d. All of the above.




1. B - The Federal Equal Credit Opportunity Act (ECOA), as part of the

Consumer Protection Act, was enacted in 1975 to protect consumers from

discriminatory lending practices. Page 55

2. C - A creditor may ask about the source of income, but only to determine the

likelihood of continued income. Page 56

3. D - The law allows credit bureaus to gather information regarding your

credit worthiness, credit standing, character, or mode of living as it relates to your

eligibility for credit. Page 57

4. D - The federal Fair Credit Reporting Act (FCRA) promotes the accuracy,

fairness, and privacy of information in the files of consumer reporting agencies: You

have the right to know what is in your file; you have the right to dispute incomplete

or inaccurate information; Access to your file is limited. Page 58 - 59

5. B - Complaints of discrimination under the Holden Act should be filed with

the Secretary for Business, Transportation, and Housing. Page 61

6. A - Some of the abusive practices that fall under the predatory lending term

are as follows: Failure to disclose terms and conditions; altering documentation;

Failure to notify Borrowers that loan terms are negotiable. Page 63

FAIR HOUSING Chapter 6 – Discrimination in Housing for the Disabled


Chapter 6 - Discrimination in Housing for the Disabled

Americans with Disabilities Act

Americans with Disabilities Act (ADA) - Awareness of a person's needs

combined with reasonable accommodation for that person, will promote equal

access for all citizens. The ADA was enacted in 1990 to bring anyone who has

disabilities into mainstream American life. In essence, the ADA extends the

federal Civil Rights Act of 1964 to include disability to the list of protected

classes. The intention of this federal law is to allow persons with disabilities to

have equal access to employment, public accommodations and commercial

facilities, transportation, and telecommunications systems.

Employers, building owners, retailers, etc. need to provide a reasonable amount

of help to people with disabilities so that they will:

Have a work environment which reasonably accommodates their disability.

Be able to go grocery and clothes shopping, and do errands like picking up

dry-cleaning.

Have access to doctors' offices, hospitals, and other medical facilities.

Attend cultural, religious, recreational and sporting events.

Have an opportunity to participate in exercise classes and sports.

Have specified parking areas with easy access to sidewalks and buildings.

Have the opportunity to eat in restaurants or fast-food places.

Be able to use public transportation.

Have TRS telecommunication service, if needed.

Generally be able to participate in a more fulfilling lifestyle.

Discrimination in Housing for the Disabled is a violation of the

Federal Fair Housing Act.



Of the five parts (titles) in the ADA, the two that most concern real estate

professionals are Titles I and III. Title I covers employment and affects anyone

who has employees, such as a brokerage firm or property manager. Title III,

which covers public accommodations and commercial facilities, primarily affects

commercial/industrial brokers, building owners and their property managers.

Title I Title I covers employment and prohibits job discrimination against "qualified

individuals with disabilities." Anyone who associates or has a relationship with

a disabled individual is also protected. As of July 26, 1994, it applies to

businesses with 15 or more employees.

A "qualified individual with a disability" is a person who has the skill, experience,

education, and other job-related requirements of a position, and who with or

without reasonable accommodation can perform the job.

Disability is defined in the ADA as:

A physical or mental impairment that substantially limits one or more of

"major life activities" of such individuals

A record of such an impairment

Being regarded as having such an impairment

Major life activities include caring for oneself, walking, talking, breathing,

seeing, hearing, speaking, learning, and working. If one of these "major life

activities" is substantially limited, it is considered a disability.

Although there is no list of qualified disabilities, the following would be

considered a disability under the ADA.

AIDS, cancer, muscular dystrophy

Diabetes, epilepsy, emotional illness

Heart disease, HIV, mental retardation

Paralysis, multiple sclerosis, cerebral palsy

Stress disorders, certain learning disabilities



However the ADA does have a list of behaviors that are NOT considered

disabilities. A partial list includes: compulsive gambling, current abusive use of

alcohol/drugs, gender identity disorders, kleptomania, lack of education,

pedophilia, poor judgment, pregnancy, prison record, psychoactive substance

use disorders, pyromania, transsexual, transvestite, or voyeurism.

Title I Obligations for Employers

Employers may not discriminate against an individual with a disability in

hiring or promotion, if the person is otherwise qualified for the job.

Employers can ask about an applicant's (employee's) ability to perform a job,

but cannot ask if someone has a disability or subject a person to tests that

tend to screen out people with disabilities.

Employers need to provide "reasonable accommodation" to individuals with

disabilities unless it imposes an "undue hardship" on the business.

Employers may reject applicants or fire employees who pose a direct threat

to the health or safety of other individuals in the work place.

Employers may not discriminate against a qualified applicant or employee

because of the known disability of an individual with whom the applicant or

employee is known to have a relationship or association.

Reasonable Accommodations that an employer could make for a disabled

employee, which should not cause undue hardship to a business owner would

include the following types of items:

Providing reserved, clearly marked parking spaces

Having entrances which are level or have a ramp

Buying special equipment and/or devices

Furnishing access to restrooms, conference rooms, lunch rooms

Providing a reader for a blind employee

Providing a telephone with TRS service

Offering retraining

Modifying examinations and training materials



Enforcement of Title I of ADA is enforced by the Equal Employment

Opportunity Commission. An employee or job applicant could be awarded

compensatory damages, punitive damages or both. An aggrieved person could

sue in civil court:

To be hired or reinstated

To receive back pay or front pay

To have a court order to stop the discrimination

Title III - Public Accommodations

Title III - Public Accommodations - Commencing January 26, 1992, building

owners, lessors, lessees and operators of privately operated businesses and not-

for-profit facilities open to the public cannot discriminate against a customer on

the basis of disabilities. This literally covers thousands of businesses which fall

within one or more of the following 12 categories:

1. Places of lodging: hotels, motels, inns

2. Places serving food or drink: restaurants, bars

3. Places of public gathering: auditoriums, convention centers

4. Places of entertainment: movie and stage theaters, concert halls

5. Retail places: grocery stores, clothing stores, shopping centers

6. Service establishments: banks, beauty shops, offices of health care

professionals, lawyers, accountants

7. Places used for public transportation: terminals, stations

8. Places of public display: museums, libraries, galleries

9. Places of recreation: parks, zoos, amusement parks

10. Places of education: private schools, nursery thru graduate school

11. Social service centers: food banks, homeless centers, day-care centers,

senior citizen centers

12. Places of exercise: gymnasiums, health spas, bowling alleys, golf courses

Obviously, each business has its own special requirements such as wheelchair

access in movie theaters, and wider aisles in restaurants and stores. Every

building owner, lessor, lessee or operator must deal with the issue of removal of

barriers.



Barriers

The ADA addresses two types of structural barriers in existing facilities

and both must be removed when it is readily achievable to do so:

Structural Communication Barriers include: signs, alarm systems, and

physical partitions that hamper conversation between employee and

customer.

Physical Barriers are temporary (such as furniture, equipment, or display

racks) and structural (such as walls, narrow doorways, inaccessible

bathrooms).

Readily Achievable means that the change or alteration can be made

without too much difficulty or expense. For example rearranging tables in a

restaurant to accommodate wheelchairs is easy, whereas adding an elevator

to a building without one is cost prohibitive.

Removal of Barriers

ADA Standards for Removal of Barriers. Two standards are applied, one

is for existing building and the other is for new construction or alterations

after January 26, 1992. The reason for this is that retrofitting old structures

to meet the new requirements can be cost prohibitive. Whereas,

incorporating the new requirements in any new construction design can be

accomplished without significant increase in cost. Therefore, all new

construction and alterations of existing facilities must be accessible.

Removing Physical Barriers on Existing Structures. Several alterations

can be made to existing structures that are not usually too costly. However, if

any of these would prove to be too costly or need extensive restructuring, it

would not be required.



Alternatives to Barrier Removal. If the physical barriers cannot be removed,

then an alternative method of providing the service must be offered, if possible.

Example - If a ramp cannot be constructed to a video or dry cleaning store,

employees could take the merchandise to the customer. Or items on display

shelves which are too high can be taken down by an employee for a person to

inspect.

Modifications to Existing Buildings:

Designate accessible parking spaces

Install ramps and making curb cuts in sidewalks and entrances

Move shelves, tables, vending machines, display racks

Re-position telephones

Add raised Braille letters to elevator controls

Include flashing lights on alarms

Widen doors or use offset hinges

Move doorknobs and other hardware to make cabinets/drawers

accessible

Upgrade bathrooms by enlarging stalls for better maneuverability,

installing grab rails and raised toilet seats, and repositioning paper towel

dispensers.

ADA Requirements for Alterations and New Construction - All new

buildings occupied after January 26, 1993 must be readily accessible by

individuals with disabilities, unless it is structurally impractical. Buildings

occupied prior to January 26, 1993 are not covered by the construction

requirements.

Before attempting making any alterations to an existing structure, or building

anything new, you should consult the ADA Accessibility Guidelines issued by the

Architectural and Transportation Barriers Compliance Board. These guidelines

were adopted by the Justice Department as the standard to the applied in new

construction.



Enforcement of Title III

Enforcement of Title III - A person who files a private lawsuit against a

commercial facility or public accommodation such as a movie theater or

restaurant, the court will grant an injunction, but not money damages. An

aggrieved person may also file a complaint with the U.S. Attorney General.

Example - Alan, a developer, asked his broker, Bob, to locate an investment

property in the downtown metropolitan area. He planned to hold it a few

years until he could get plans drawn and approved for a new office building.

Bob found a 40-year old, two-story professional medical building, which had

no elevator, narrow stairwells, and inadequate parking, but was in a great

location. John asked Bob if he would need to widen the stairwells or put in

an elevator because of the ADA requirements. Bob told him not to worry

since the building was only two stories, so ADA requirements for reasonable

accommodations did not apply. When the building transfers ownership, will

John be required to retrofit the structure by installing an elevator and

widening the stairwells to meet ADA standards?

Since this building is over 40 years old, installing an elevator and widening

stairwells would not be readily achievable because it would require

extensive renovation at an exorbitant expense, therefore John would not be

required to do it.

However, he may be required to install ramps, make curb cuts in sidewalks

and entrances, and widen doors on the first floor.

When Renting - A landlord may not prevent a disabled person from making

reasonable changes to the property to allow for the access to the areas of the

property for the normal use and enjoyment of the residence. Allowable changes

to the property will be at the tenant’s expense and the property must be

returned to its original condition when the disabled person vacates the property.



Construction of new multi-family, residential structures of four (4) or

more units built for occupancy after the Fair Housing Amendments Act of 1988

are required to provide accessibility for common and public use by the

handicapped. Under the Federal Fair Housing Act, covered multi-family

dwellings mean buildings consisting of 4 or more units if such buildings have

one or more elevators and ground floor units. The structures must have:

All doors allow passage by handicapped persons in wheelchairs

Passageways including hallways allow passage by handicapped

persons in wheelchairs

Accessible route into and through the dwelling

Light switches, thermostats, electrical outlets, and other controls in

accessible locations

Reinforcements for grab bars or the installation of grab bars in

bathrooms

Kitchens and bathrooms usable to those with handicaps.

State and local authorities may amend the federal regulations within the

guidelines of the provisions.

Administration of the Fair Housing Act

Administration of the Fair Housing Act is the responsibility of the

Secretary of the Department of Housing and Urban Development (HUD). A

consumer or any person who believes they have been discriminated against in

housing or lending may file a written complaint with HUD.

When there is reason to believe that a party or entity has a pattern of

discriminatory actions the Department of Justice may start a lawsuit. The

aggrieved person has one year from the date that the discriminatory act

occurred to file a complaint with HUD. The written complaint should contain as

much documentation and verification of the discrimination as possible. HUD

may also choose to file a suit under their initiative.



HUD must respond to the complainant to notify them of receipt and the

choices they have to proceed with the complaint. The following actions and time

frames apply:

HUD must notify respondent within 10 days of receiving the

complaint and provide a copy of the original complaint

Allow the respondent 10 days of notice to answer the complaint

Investigation of the complaint within 100 days of the date the

complaint was filed

During the investigation the parties may reach a conciliatory agreement, or

HUD may find the complaint valid and require the respondent to correct any

actions and/or pay a fine or reimbursement. HUD may also find that the

complaint was unjustified and find in favor of the respondent. All parties must

comply with the findings or may face up to one year in prison or a fine of not

more than $100,000.

The Department of Justice may pursue action against any party that appears

to be a repeat offender or a pattern of discriminatory acts through the course of

business whether as a landlord, manger, Real Estate Broker/Agent, Mortgage

Broker, or lender.

The Attorney General may commence civil action in any United State district

court or a civil action if the date of the discriminatory act has been more than 18

months. The court in a civil action may assess a fine not to exceed $55,000 for

the first offence and not more than $110,000 for subsequent violations.

Self-testing by parties engaged in the Real Estate industry should be

implemented to prevent and recognize discrimination within their business.

Voluntary release of documentation which may be required by or helpful to any

case filed in a regards to discriminatory action is expected.

FAIR HOUSING Chapter 6 – Incremental Assessments / Quiz


Chapter 6 – Incremental Assessments / Quiz 1. The intention of the Americans with Disabilities Act is to allow persons with disabilities to have equal access to a. transportation b. public accommodations and commercial facilities c. employment and telecommunications systems d. All of the above 2. Which of the following would NOT be considered a disability under the ADA? a. Stress disorder b. Voyeurism c. Cancer d. Cerebral palsy 3. Title 1 of the Americans with Disabilities Act is enforced by the a. Secretary of Labor b. Secretary of Commerce c. Equal Employment Opportunity Commission d. Employment Development Department 4. Under the ADA, which of the following is not considered a structural

communication barrier? a. Sofa b. Physical partition c. Alarm system d. Signs 5. Under the ADA guidelines, if a physical barrier cannot be removed what may

be done? a. No additional accommodations are required. b. An alternative method of providing the service must be offered, if

possible. c. The building must be removed and a new “code compliant” building erected.

d. None of the above.



6. When renting to a disabled person, the Landlord may a. Prevent the Tenant form making changes. b. Be responsible for the cost of modifications to the property. c. Not prevent necessary changes for access. d. Need to provide special adaptations to the property. 7. Any consumer complaints of discrimination are the responsibility of a. Attorney General b. Department of Housing and Urban Development c. Federal Reserve Board d. Federal Trade Commission




1. D - The intention of the ADA is to allow persons with disabilities to have

equal access to employment, public accommodations and commercial facilities,

transportation, and telecommunications systems. Page 66

2. B - However the ADA does have a list of behaviors that are NOT considered

disabilities. A partial list includes: compulsive gambling, current abusive use of

alcohol/drugs, gender identity disorders, kleptomania, lack of education, pedophilia,

poor judgment, and pregnancy, prison record, psychoactive substance use

disorders, pyromania, transsexual, transvestite, or voyeurism. Page 68

3. C - Enforcement of Title 1 of ADA is by the Equal Employment Opportunity

Commission. Page 69

4. A - Structural Communication Barriers include: signs, alarm systems, and

physical partitions that hamper conversation between employee and customer.

Physical Barriers are temporary (such as furniture, equipment, or display racks) and

structural (such as walls, narrow doorways, inaccessible bathrooms). Page 70

5. B - Alternatives to Barrier Removal. If the physical barriers cannot be

removed, then an alternative method of providing the service must be offered, if

possible. Page 71

6. C - When Renting, a landlord may not prevent a disabled from making

reasonable changes to the property to allow for the access to the areas of the

property for the normal use and enjoyment of the residence. Page 72

7. B - A consumer or any person who believes they have been discriminated

against in housing or lending may file a written complaint with HUD. Page 73