HUD Announces Settlements with Insurance Companies Over Alleged Discriminatory Practices

Fair Lending / Fair Servicing  •  HUD

On January 26, 2017, the Department of Housing and Urban Development (“HUD”) announced that it reached settlements with two insurance companies, available here and here​, resolving allegations that the companies’ practice of refusing to provide home insurance on properties used for subsidized or low income housing had a discriminatory effect on minorities.

HUD’s complaint alleged violations of the Fair Housing Act (“FHA”), 42 U.S.C. §§ 3601-3619, which prohibits race discrimination in mortgage lending practices. HUD brought the complaint after receiving reports that the companies were refusing to provide insurance on properties that accepted low-income and subsidized housing tenants. The companies allegedly refused to provide insurance on any properties labeled “subsidized” or “low-income” on insurance applications.

Under the terms of the first settlement agreement​, the company agreed to remove the terms “subsidized” or “low-income housing” from its list of prohibited exposures, certain underwriting guidelines, and insurance applications. The company also agreed that it will reform its underwriting practices and train staff not to consider whether a property accepts low income or subsidized housing tenants when making underwriting decisions. Further, the company agreed to spend $100,000 to market its insurance products in affordable and low-income housing markets.

Under the terms of the second settlement agreement​, the company agreed to provide FHA training to its underwriting staff, and pay $10,000 to market its insurance products in affordable and low-income housing markets.

The companies did not admit to any wrongdoing as part of the settlement agreements.

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