In proposed section 100.500(c)(2), HUD provides three avenues of defense when a disparate impact claim is made based on the use of a “model … such as a risk assessment algorithm.” The proposed rule allows a defendant to prevail when it can establish any of three alternative defenses: In this blog post, we take a closer look at a new and unique aspect of the proposed rule: its treatment of mathematical models (like risk-scoring models used in the credit industry).
In its proposed disparate impact rule published in today’s Federal Register, HUD sets forth a framework for making (and defending against) claims of disparate impact under the Fair Housing Act.
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