The Supreme Court recently granted certiorari in a case that may require the CFPB to re-write part of its recently-released Mortgage Servicing Examination Procedures. Magner v. Gallagher raises the issue of whether disparate impact claims are even cognizable under the Fair Housing Act, and will require the Supreme Court to decide that issue in the context of deferring (or not deferring) to a long-standing HUD interpretation of that Act to allow disparate impact claims.
Depending on the Supreme Court’s holding and its reasoning, the decision may also impact the Equal Credit Opportunity Act. If, for example, the Supreme Court holds that the Fair Housing Act does not allow disparate impact claims because there is no support for such a claim in the statute’s text, that same rationale would seem to be equally applicable to ECOA, which is also silent as to disparate impact claims. And the same administrative deference issue also applies to ECOA, since there is a footnote in Regulation B that asserts that disparate impact claims are available under ECOA.
Even beyond the question of whether disparate impact claims may be pursued, the Supreme Court may also see Magner as an opportunity to specify the burden of proof and the types of evidence that may suffice to show a disparate impact under the Fair Housing Act, and any such analysis may also be easily applicable under ECOA.
In any event, there is a good chance that the Court’s decision in Magner will impact disparate impact analysis in some significant way, and we’ll be watching to see not only what the Court does, but also how the CFPB reacts.