Friday, November 18, 2011

FYI: HUD Issues Proposed Rule on "Discriminatory Effects" Test Under FHA

The U.S. Department of Housing and Urban Development recently issued the
attached proposed rule to establish a uniform standard of liability for
facially neutral housing practices that have a discriminatory effect in
supposed violation of the Fair Housing Act.

Under the proposed rule, liability for "discriminatory effects" or
"disparate impact discrimination" under the FHA would be determined by a
burden-shifting approach. That is:

(1) the plaintiff or complainant first must bear the burden of proving its
prima facie case of either disparate impact or perpetuation of
segregation;

(2) the burden then shifts to the defendant or respondent to prove that
the challenged practice or policy has a necessary and manifest
relationship to one or more of the defendant's or respondent's legitimate,
nondiscriminatory interests; and

(3) if the defendant or respondent satisfies its burden, the plaintiff or
complainant may still establish liability by demonstrating that these
legitimate nondiscriminatory interests could be served by a policy or
decision that produces a less discriminatory effect.


According to HUD, neither HUD nor any federal court has ever determined
that liability under the Fair Housing Act requires a finding of
discriminatory intent, and "[i]t is thus well established that liability
under the Fair Housing Act can arise where a housing practice is
intentionally discriminatory or where it has a discriminatory effect."

However, there has been some variation in the application of the
discriminatory effects standard. HUD uses the three-step burden-shifting
approach described above, as do many federal courts of appeals. On the
other hand, some courts apply a multi-factor balancing test, other courts
apply a hybrid between the two, and one court applies a different test for
public and private defendants. The proposed rule would standardize the
three-step burden-shifting approach.

Another source of variation is in the application of the burden-shifting
test. If the defendant or respondent satisfies its burden to justify its
challenged practice as having a necessary and manifest relationship with a
legitimate nondiscriminatory interest, courts and HUD administrative law
judges have differed as to which party bears the burden of proving whether
a less discriminatory alternative to the challenged practice exists.

The majority of federal courts of appeals that use a burden-shifting
approach place this burden on the plaintiff, analogizing to Title VII's
burden-shifting framework. However, other federal courts have kept the
burden with the defendant. HUD has, at times, placed this burden of
proving a less discriminatory alternative on the respondent and, at other
times, on the complainant. The proposed rule would place the burden of
rebuttal on the plaintiff or complainant.

The purpose of HUD's proposed rule is to establish uniform standards for
determining when a housing practice with a discriminatory effect violates
the Fair Housing Act.

Comments are due 60 days from the date of publication of the proposed rule
in the Federal Register, which is expected shortly.

Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mtwllp.com


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Wednesday, November 16, 2011

FYI: PEB for UCC Issues Report on UCC Rules Governing Transfer and Enforcement of Notes Secured by Real Property

The Permanent Editorial Board for the Uniform Commercial Code (PEB) issued
the attached Report regarding the statutory background for several key
rules in the UCC that govern the transfer and enforcement of notes secured
by a mortgage on real property.

Specifically, the Report examines the rules relating to four specific
questions:


1. Who is the person entitled to enforce a mortgage note and,
correspondingly, to whom is the obligation to pay the note owed?

2. How can the owner of a mortgage note effectively transfer ownership of
that note to another person or effectively use that note as collateral for
an obligation?

3. What is the effect of transfer of an interest in a mortgage note on
the mortgage securing it?

4. May a person to whom an interest in a mortgage note has been
transferred, but who has not taken a recordable assignment of the
mortgage, take steps to become the assignee of record in the real estate
recording system of the mortgage securing the note?

The PEB was established in 1961 by the American Law Institute and the
Uniform Law Commission, which jointly sponsor the Uniform Commercial Code.
One of the charges of the PEB is to issue commentaries "and other
articulations as appropriate to reflect the correct interpretation of the
[Uniform Commercial] Code and issuing the same in a manner and at times
best calculated to advance the uniformity and orderly development of
commercial law."

A draft of the PEB's Report was made available to the public for comment
on March 29, 2011, and the comments were taken into account in preparing
the final Report.

Ralph T. Wutscher
McGinnis Tessitore Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874
Email: RWutscher@mtwllp.com


NOTICE: We do not send unsolicited emails. If you received this email in
error, or if you wish to be removed from our update distribution list,
please simply reply to this email and state your intention. Thank you.


Our updates are available on the internet, in searchable format, at:
http://updates.kw-llp.com

CONFIDENTIALITY NOTICE: This communication (including any related attachments) is intended only for the person/s to whom it is addressed, and may contain confidential and/or privileged material. Any unauthorized disclosure or use is prohibited. If you received this communication in error, please contact the sender immediately, and permanently delete the communication (including any related attachments) and permanently destroy any copies.

IRS CIRCULAR 230 NOTICE: To the extent that this message or any attachment concerns tax matters, it is not intended to be used and cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed by law.