Nos. 15-1111 & 15-1112

IN THE

Supreme Court of the United States_______________________

BANK OF AMERICA CORP., ET AL.,Petitioners,

v.

CITY OF MIAMI, FLORIDA,Respondent.

_________________________

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

__________________________________

BRIEF OF AMICI CURIAE AARP AND AARPFOUNDATION IN SUPPORT OF RESPONDENT

___________________________________

WILLIAM ALVARADO RIVERA

SUSAN ANN SILVERSTEIN

Counsel of RecordAARP FOUNDATION601 E STREET, NWWashington, DC 20049202 434-2060

October 7, 2016 Counsel for Amici Curiae

i

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES....................................... ii

INTERESTS OF AMICI CURIAE ............................. 1

SUMMARY OF ARGUMENT.................................... 3

ARGUMENT............................................................... 5

I. Older People are DisproportionatelyHarmed by Predatory Lending andits Consequences ................................... 5

II. Cities Have an Obligation toAddress Discriminatory LendingUnder the Fair Housing Act’sAffirmatively Furthering Provision ... 11

III. Cities Should Have StandingUnder the FHA to Hold LendersAccountable for the Public Harmsand Forseeable ConsequencesThat Result from theirDiscriminatory Lending Practices...... 17

CONCLUSION ......................................................... 21

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TABLE OF AUTHORITIES

PageCASES

Clients’ Council v. Pierce,711 F.2d 1406 (8th Cir. 1983).........................17

County of Westchester v. U.S. Dep’t of Hous.and Urban Dev.,802 F.3d 413 (2d Cir. 2015) ......................13, 14

Hargraves v. Capital City Mortg. Corp.,140 F. Supp. 2d 7 (D.D.C. 2000).....................18

Mayor of Baltimore v. Wells Fargo Bank, N.A.,2011 U.S. Dist. LEXIS 44013 (D. Md.Apr. 22, 2011)..................................................16

Mt. Holly Gardens Citizens in Action, Inc. v.Twp. of Mount Holly,658 F.3d 375 (3d Cir. 2011), cert. granted,133 S. Ct. 2824 (2013), cert. dismissed,134 S. Ct. 636 (2013).........................................1

N.A.A.C.P. v. Sec’y of Hous. & Urban Dev.,817 F.2d 149 (1st Cir. 1987) ...........................11

Otero v. N.Y. City Hous. Auth.,484 F.2d 1122 (2d Cir. 1973) ..........................11

Shannon v. U.S. Dep't of Hous. & Urban Dev.,436 F.2d 809 (3d Cir. 1970) .......................11-12

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Texas Dep’t of Hous. and Cmty. Affairs v.Inclusive Cmty’s Project, Inc.,135 S. Ct. 2507 (2015).......................................1

Trafficante v. Metropolitan Life Ins. Co.,409 U.S. 205 (1972).........................................17

STATUTES

Title VI of the Civil Rights Act, 42 U.S.C.§§ 2000d-2000d-7 ............................................14

42 U.S.C. § 3601. .........................................1, 4, 11, 2042 U.S.C. § 3604 (a), (f) .............................................1142 U.S.C. § 3608. .......................................................2042 U.S.C. § 3608 (d), (e) (5) ...............................3, 4, 1142 U.S.C. §§ 5301–5317 (2006) .................................13

LEGISLATIVE HISTORY

114 Cong. Rec. 2276 (1968) ...................................... 17114 Cong. Rec. 2527-2528 (1968) ............................. 17114 Cong. Rec. 9559 at 2706 (1967) ......................... 17

REGULATIONS

24 C.F.R. § 5.150........................................................1224 C.F.R. §§ 5.150 - 5.180 (2015). .......................12, 1324 C.F.R. § 5.152....................................................4, 1324 C.F.R. pt. 91 and 903............................................14

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OTHER AUTHORITIES

William C. Apgar & Zhu Xiao Di, J. Ctr. forHous. Studies at Harv. Univ., HousingWealth and Retirement Savings:Enhancing Financial Security for OlderAmericans 16 (2005), http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/w05-8.pdf. ......................................................... 8

Baher Azmy, Squaring the Predatory LendingCircle: A Case for States as Laboratoriesof Experimentation, 57 F. L. Rev. 295(2005)......................................................5, 9, 10

Kermit Baker, et al., J. Ctr. for Hous. Studiesof Harv. Univ., Housing America’s OlderAdults: Meeting the Needs of an AgingPopulation (2014), http://www.jchs.harvard. edu/sites/jchs.harvard.edu/files/jchs-housing_ americas_older_adults_2014.pdf....................................... 8-9, 10

Cmty. Planning and Dev., U.S. Dep't of Hous.& Urban Dev., CPD AppropriationsBudget, http://portal.hud.gov/hudportal/HUD?src=/ program_ offices/comm_planning/about/budget...............................13-14

Kathleen C. Engel & Patricia A. McCoy, ATale of Three Markets: The Law andEconomics of Predatory Lending, 80Tex. L. Rev. 1255 (2002). ..............................6, 7

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Jennifer Goldberg, et. al., Justice in Aging,How to Prevent and End HomelessnessAmong Older Adults (2016), http://www. justiceinaging.org/ wp-content/uploads/2016/04/Homelessness-Older-Adults.pdf...................................................10-11

Deborah Goldstein, J. Ctr. For Hous. Studies ofHarv. Univ., Understanding PredatoryLending: Moving Towards a CommonDefinition and Workable Solutions,(1999), http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/goldstein_w99-11.pdf. ....................................................6, 9

James J. Kelly, Jr., Affirmatively FurtheringNeighborhood Choice: Vacant PropertyStrategies and Fair Housing, 46 U.Mem. L. Rev. 1009 (2016). ..............................19

Mark Mather et al., Population ReferenceBureau, Aging in the United States, 70Population Bull. (Dec. 2015), http://www.prb.org/pdf16/aging-us-population-bulletin.pdf. ................................................5-6, 8

Miami Dep’t of Cmty. & Econ. Dev., ConsolidatedAnnual Performance & Evaluation Report(Fiscal Year 2013 – 2014), http://www.miamigov.com/ communitydevelopment/Docs/Reports/CAPERFINALFY1314.pdf. ......14

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Nat’l Fair Hous. All., Zip Code Inequality:Discrimination by Banks in theMaintenance of Homes in Neighborhoodsof Color (Aug. 27, 2014), http://www.mvfairhousing.com/pdfs/2014-08-27_NFHA_REO_report.PDF ................................19

Off. of Block Grant Assistance, U.S. Dep't ofHous. & Urban Dev., Basically CDBG1-4 (May 2014), https://www.hudexchange.info/resources/documents/Basically-CDBG-Chapter-1-Overview.pdf. ................................13

Off. of Pol’y Dev. and Res., U.S. Dep’t of Hous.and Urban Dev., Vacant and AbandonedProperties: Turning Liabilities into Assets,Evidence Matters (Winter 2014), https://www.huduser.gov/portal/periodicals/em/winter14/highlight1.html .........................19, 20

Relman, Dane & Colfax P.L.L.C., BaltimoreSettles Landmark Fair Lending CaseAgainst Wells Fargo, http://www.relmanlaw.com/civil-rights-litigation/cases/Baltimore-v-wells- settlement.php#sthash.ZHx06jPu.dpuf (lastvisited October 4, 2016). .................................16

Robert G. Schwemm, Overcoming StructuralBarriers to Integrated Housing: A Back-to-the-Future Reflection on the FairHousing Act's "Affirmatively Further"Mandate, 100 Ky. L.J. 125 (2012). .................13

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Thomas Shapiro et al., Inst. on Assets and Soc.Pol’y, The Roots of the Widening RacialWealth Gap: Explaining the Black-White Economic Divide (2013), http://iasp.brandeis.edu/pdfs/Author/shapiro-thomas-m/racialwealthgapbrief.pdf. ................5

Jonathan Spader, J. Ctr. For Hous. Studiesof Harv. Univ., How Much of theHomeownership Rate Decline from2005-2015 is Due to Foreclosures?(May 26, 2016), http://housingperspectives.blogspot.com/ 2016/05/how-much-of-homeownership-rate-decline.html...............................................10, 19

Lori Trawinski, AARP Pub. Pol’y Inst.,Nightmare on Main Street: OlderAmericans and the Mortgage MarketCrisis (2012), http://www.aarp.org/content/dam/aarp/research/public_policy_institute/cons_prot/2012/nightmare-on-main-street-AARP-ppi-cons-prot.pdf. ..............................6, 7, 10, 18

U.S. Dep’t of Hous. and Urban Dev.,Affirmatively Furthering Fair HousingAssessment Tool: Announcement ofFinal Approved Document, 80 Fed.Reg., 81840 (Dec. 31, 2015) ......................15, 16

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U.S. Dep’t of Hous. and Urban Dev., FairHousing Planning Guide (1996), http://www.hud.gov/offices/fheo/images/fhpg.pdf. ................................................... 15, 16

U.S. Dep’t of Treas. & U.S. Dep’t of Hous. andUrban Dev., Joint Report onRecommendations to Curb PredatoryMortgage Lending (2000), https://www. treasury.gov/press-center/press-releases/Documents/treasrpt.pdf...................................................4-5, 7, 18, 20

Aleatra P. Williams, Lending Discrimination,the Foreclosure Crisis and thePerpetuation of Racial and EthnicDisparities in Homeownership in theU.S., 6 Wm. & Mary Bus. L. Rev. 601(2015).....................................................8, 15, 18

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INTERESTS OF AMICI CURIAE1

AARP is a nonprofit, nonpartisan organizationdedicated to fulfilling the needs and representing theinterests of people age fifty and older. AARP fightsto protect older people’s financial security, health,and well-being. AARP’s charitable affiliate, AARPFoundation, creates and advances effective solutionsthat help low-income individuals fifty and oldersecure the essentials. Among other efforts, AARPand AARP Foundation advocate for the elimination ofdiscrimination in housing and for the availability ofaffordable, accessible, and appropriate housingthrough the vigorous enforcement of fair housinglaws. For example, AARP Foundation attorneyslitigate on behalf of plaintiffs to challenge practicesthat violate the Fair Housing Act (FHA), 42 U.S.C.§ 3601 et seq. See, e.g., Mt. Holly Gardens Citizens inAction, Inc. v. Twp. of Mount Holly, 658 F.3d 375 (3dCir. 2011), cert. granted, 133 S. Ct. 2824 (2013), cert.dismissed, 134 S. Ct. 636 (2013). AARP and theAARP Foundation also participate in such cases asamici curiae. See, e.g., Texas Dep’t of Hous. andCmty. Affairs v. Inclusive Cmty’s Project, Inc., 135 S.Ct. 2507 (2015).

1 Pursuant to Supreme Court Rule 37.6, counsel for amici representthat no counsel for a party authored this brief in whole or in part and thatnone of the parties or their counsel, nor any other person or entity otherthan amici, its members or its counsel, made a monetary contributionintended to fund the preparation or submission of this brief. All partieshave consented to the filing of amicus briefs and have filed lettersreflecting their blanket consent with the Clerk.

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AARP and AARP Foundation submit this briefbecause low income, older and minority homeownersand neighborhoods are disproportionately harmed bydiscriminatory lending. Discriminatory lending isone of the barriers to fair housing that cities arerequired to address by the United States Departmentof Housing and Urban Development (HUD) to complywith the FHA and to receive HUD funding. Ifstanding under the FHA is narrowed such that citiesare unable to challenge discriminatory conduct,which not only harms the residents of itsneighborhoods and communities, but alsoeconomically harms the city, Congress’s intent inenacting the FHA, to end segregation and createtruly integrated living patterns, will be frustrated.In addition, cities will be unable to use litigation as astrategy to meet their affirmatively furthering fairhousing obligations under the FHA, and theirdistressed neighborhoods likely will spiral intofurther decline.

AARP and AARP Foundation have a stronginterest in participating in this case because theyfight to protect the financial security of older peopleand advocate for adequate housing that is affordableand meets the needs of the burgeoning population ofolder people. The financial security of older people,eighty percent of whom are homeowners, isthreatened by discriminatory lending practicesbecause older people are particularly vulnerable toand targeted by lending practices that violate theFHA, such as those challenged in this case.

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SUMMARY OF ARGUMENT

The vast majority of older Americans arehomeowners. Older Americans seek to rely on theirhomes for financial security in their later years whentheir incomes may be fixed. The equity in a homethat has accumulated over time can be used as afinancial asset to meet needs that affect quality of lifeas one ages, including health care and home repairs.Unfortunately, older homeowners, and especiallyolder minority homeowners, are at disproportionaterisk of losing their homes because of predatorysubprime lending and its effects.

Predatory lenders profit from targetingvulnerable borrowers for loans that have moreexpensive or less favorable terms than those forwhich the homeowners are qualified. Theseunfavorable terms make older and minorityhomeowners are more likely to fall behind onmortgage payments, and, inexorably, to faceforeclosure. Once older people lose their home, theyare less likely than their young counterparts to everagain become homeowners and are more likely toface health problems.

Under the FHA, HUD and other federalagencies have an obligation to further fair housing.42 U.S.C. § 3608 (d), (e)(5). One way in which HUDfulfills this obligation is by working with thoseentities that receive its funding to ensure that fairhousing is affirmatively furthered at the local level.In this way, the intent of Congress in enacting theentire FHA to “provide, within constitutional

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limitations, for fair housing throughout the UnitedStates,” 42 U.S.C. § 3601, and its intent in enactingthe affirmatively furthering provisions, § 3608 (d),(e)(5), can be fulfilled. HUD required cities and otherrequired entities to take meaningful and significantactions to affirmatively further fair housing (AFFH).24 C.F.R. § 5.152. One of those requirements is todetermine if discriminatory lending is present, and ifso, whether and how the city will take effective actionto address it. If a city were to fail to comply with itsAFFH obligations, HUD could take complianceactions, ranging from a warning including providinghelp and technical assistance, to withholding funds.

Where lenders violate the FHA bydiscriminating against protected classes, citiesshould have standing to challenge practices thatcause foreseeable public consequences and economicharm to the cities. The FHA is not only directed toindividual based discrimination, but is intended tofocus on the community and neighborhoods. Mostimportantly, it is intended to provide a remedy forsegregation. Subprime and predatory mortgagelending discrimination has a greater effect not onlyon minority borrowers, but on minorityneighborhoods as well.

The chain of events that occurs as the result ofpredatory subprime lending has been known, studiedand described. U.S. Dep’t of Treas. & U.S. Dep’t ofHous. and Urban Dev., Joint Report onRecommendations to Curb Predatory MortgageLending (2000), https://www.treasury.gov/press-center/press-releases/Documents/treasrpt.pdf

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[hereinafter Joint Report]. Subprime or predatorymortgage lending leads to an increased risk offoreclosure. Subprime mortgage loans are morelikely to be predatory, that is, abusive. Foreclosureslower home values within an area around theforeclosed home. Foreclosed homes are likely to beabandoned. Abandoned homes bring problems thatfurther reduce the property values of nearby homes.Thus, it is entirely foreseeable that engaging inpredatory lending practices results in loweringproperty values, causing economic harm to a citythrough reduced tax revenue.

ARGUMENT

I. Older People are DisproportionatelyHarmed by Predatory Lending and itsConsequences.

Homeownership is the “source of wealth thatshould offer the security and prosperity so centrallyconnected to the narrative of the American Dream.”Baher Azmy, Squaring the Predatory Lending Circle:A Case for States as Laboratories of Experimentation,57 F. L. Rev. 295, 345 (2005); see also ThomasShapiro et al., Inst. on Assets and Soc. Pol’y, TheRoots of the Widening Racial Wealth Gap: Explainingthe Black-White Economic Divide (2013), http://iasp.brandeis.edu/pdfs/Author/shapiro-thomas-m/racialwealthgapbrief.pdf. It is an especially importantsource of wealth for the older population, almost 80percent of whom are homeowners. Mark Mather etal., Population Reference Bureau, Aging in theUnited States, 70 Population Bull. 2 (Dec. 2015),

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http://www.prb.org/pdf16/aging-us-population-bulletin.pdf. Older Americans often tap their homeequity, which is often their most valuable or onlyasset, to help pay for retirement or unexpectedexpenses. Lori Trawinski, AARP Pub. Pol’y Inst.,Nightmare on Main Street: Older Americans and theMortgage Market Crisis (2012), http://www.aarp.org/content/dam/aarp/research/public_policy_institute/cons_prot/2012/nightmare-on-main-street-AARP-ppi-cons-prot.pdf.

Older people are particularly vulnerable tolosing their homes due to predatory lendingpractices.2 Lenders frequently target the elderly andlow-income minorities because they view them asmore vulnerable to predatory practices. Kathleen C.Engel & Patricia A. McCoy, A Tale of Three Markets:The Law and Economics of Predatory Lending, 80Tex. L. Rev. 1255, 1280-83 (2002). Many olderhomeowners no longer carry a mortgage and arelikely to have significant equity, making themtargets for lenders that profit more from larger loans.

2 It is the circumstances regarding a loan that typically makeit predatory. Kathleen C. Engel & Patricia A. McCoy, A Tale ofThree Markets: The Law and Economics of Predatory Lending,80 Tex. L. Rev. 1255, 1261 (2002). Lending practices becomepredatory when lenders target a particular population, takeadvantage of the borrower's inexperience and lack ofinformation, manipulate a borrower into a loan the borrowercannot afford to pay, or with terms that are significantly lessadvantageous than a loan for which the borrowers are qualified.Deborah Goldstein, J. Ctr. For Hous. Studies at Harv. Univ.,Understanding Predatory Lending: Moving Towards a CommonDefinition and Workable Solutions, 7-8 (1999), http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/goldstein_w99-11.pdf.

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Id. They may seek out lenders or be receptive tooffers for home equity loans to pay for home repairs,health care, or to assist other family members. Id. Inaddition, older people, and especially olderminorities, are vulnerable to predatory lendingbecause many are likely to live alone and to be homewhen door-to-door salespeople knock ortelemarketers call. Id.

Whether or not they are predatory, subprimeloans carry higher interest rates, fees, and closingcosts than do prime loans. See id. at 1261. Subprimeloans were aggressively marketed and sold toborrowers, including many older and minorityborrowers who qualified for a less expensive, higherquality prime loans, leading up to the housingmarket collapse that occasioned the Great Recession.Id. Subprime lending has a particularlydisproportionate impact on older minority borrowers.In a 2011 study, subprime loans made up only 6.8percent of the overall loan count made to whiteborrowers 50 years and over, but subprime loanswere 21.8 percent of the overall loan count forAfrican-American borrowers 50 and over, and 12.9percent of the overall loan count for Hispanicborrowers 50 and over. Trawinski, supra, at 10-11.3

3 This reflects the racially unequal distribution of subprimemortgages in the general population, even when the data arecontrolled for income level and credit rating. See, e.g., U.S.Dep’t of Treas. & U.S. Dep’t of Hous. and Urban Dev., JointReport on Recommendations to Curb Predatory MortgageLending 1 (2000) https://www.treasury.gov/press-center/press-releases/Documents/treasrpt.pdf. African-American andHispanic homeowners and communities also sufferdisproportionately from rates of foreclosure. Aleatra P.

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Even modestly inflated prices, charges andfees associated with subprime lending make olderhomeowners more vulnerable to losing their homesbecause high housing costs consume adisproportionate share of their more limited income.See William C. Apgar & Zhu Xiao Di, J. Ctr. forHous. Studies of Harv. Univ., Housing Wealth andRetirement Savings: Enhancing Financial Securityfor Older Americans 16 (2005), http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/w05-8.pdf(the majority of homeowners 50 and over haveincome that is below median and are more likely tohave a fixed income). More than 25 percent of olderhomeowners spend a large enough proportion of theirmonthly household income on housing expenses (e.g.mortgage, utilities, taxes) to be considered to have a“housing cost burden,” defined as paying more than30% of gross income. Mather, supra, at 6. Suchhousing cost burdens can negatively affect the healthand economic well-being of older Americans. Apgar& Di, supra, at 16. The vast majority of olderhomeowners living at the lower economic marginsand still paying a mortgage debt are paying most oftheir income for housing costs. Kermit Baker, et al.,J. Ctr. for Hous. Studies of Harv. Univ., HousingAmerica’s Older Adults: Meeting the Needs of anAging Population 3 (2014), http://www.jchs.harvard.

Williams, Lending Discrimination, the Foreclosure Crisis andthe Perpetuation of Racial and Ethnic Disparities inHomeownership in the U.S., 6 Wm. & Mary Bus. L. Rev. 601,629-631 (2015).

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edu/sites/jchs.harvard.edu/files/jchs-housing_americas_older_adults_2014.pdf; see also DeborahGoldstein, J. Ctr. For Hous. Studies of Harv. Univ.,Understanding Predatory Lending: Moving Towardsa Common Definition and Workable Solutions 7-8(1999), http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/goldstein_w99-11.pdf.

Predatory lending practices rob older people ofthe equity they built in their homes over many years,eliminating the primary source of wealth upon whichthey have relied to sustain them through theirlifespan. “Predatory lending, therefore, is not onlyhurting tens of thousands of American familiesannually, it is also slowly and steadily draining amajor source of wealth from poor, minority, andelderly communities in the form of home equity.”Azmy, supra, at 345. Approximately 1.5 millionfamilies that lost their homes to foreclosure between2007-2011 were headed by a person over age 50.Trawinski, supra, at 1. During the same time period,the rate of serious delinquency in making mortgagepayments faced by people 50 and over outpaced thatof younger homeowners. Id. One-quarter ofsubprime loans of borrowers age 50 and over wereseriously delinquent as of December 2011. Id.Mortgage delinquency itself is associated withincreased incidence of mental health problems forpeople 50 and over. Id. at 5-6. Older homeowners’high rate of delinquencies resulting from subprimemortgages creates further risk of exposure to othertypes of predatory lending, which in turn againincreases their risk of foreclosure. Id. at 22. Forinstance, older homeowners that fall behind on

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mortgage payments face an increased risk of beingtargeted by foreclosure rescue scammers. Id. Over40 percent of reported losses from foreclosure rescuescams between 2009 and 2011 were suffered byhomeowners 50 and over. Id.

Once an older homeowner loses a home toforeclosure, that homeowner is less likely to become ahomeowner again than a homeowner of a youngerage. Jonathan Spader, J. Ctr. For Hous. Studies ofHarv. Univ., How Much of the Homeownership RateDecline from 2005-2015 is Due to Foreclosures? (May26, 2016), http://housingperspectives.blogspot.com/2016/05/how-much-of-homeownership-rate-decline.html (from 2005 - 2015, the loss of homes toforeclosures was more closely correlated tohomeownership rates among older homeowners thanto any other age group). Older people who lose theirhomes to foreclosure lose not only their shelter, butalso the wealth, financial stability, and well-beingthat homeownership affords them. Id. at 3. See alsoBaker, at 1. Foreclosure, and even the threat offoreclosure, is associated with significant negativehealth consequences. Trawinski, supra, at 4. Low-income older people may lose their independence andopportunity to live in the community. If they cannotfind affordable or accessible housing, their onlyalternative might be institutionalization, becauseMedicaid funded nursing home placement might bethe only readily available option other thanhomelessness. Jennifer Goldberg, et. al., Justice inAging, How to Prevent and End Homelessness Among

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Older Adults 5 (2016), http://www.justiceinaging.org/wp-content/uploads/2016/04/Homelessness-Older-Adults.pdf.

II. Cities Have an Obligation to AddressDiscriminatory Lending Under theFair Housing Act’s AffirmativelyFurthering Provision

The FHA was enacted “to provide, withinconstitutional limitations, for fair housingthroughout the United States.” 42 U.S.C. § 3601. Inorder to accomplish this goal, the FHA in addition toprohibiting discrimination in the broad housingmarket on the basis of race, color, national origin,sex, religion, familial status, and disability, 42 U.S.C.§ 3604 (a), (f), includes an affirmative obligation forHUD and other federal agencies to further fairhousing. 42 U.S.C. § 3608 (specifically, subsections(d) and (e)(5)). Section 3608 reflects Congress’sdesire that “HUD do more than simply notdiscriminate itself; it reflects the desire to have HUDuse its grant programs to assist in endingdiscrimination and segregation, to the point wherethe supply of genuinely open housing increases.”N.A.A.C.P. v. Sec’y of Hous. & Urban Dev., 817 F.2d149, 155 (1st Cir. 1987) (observation by then-JudgeStephen Breyer (now Justice Breyer)); see also, Oterov. N.Y. City Hous. Auth., 484 F.2d 1122 (2d Cir. 1973)(Section 3608 requires public housing authorityadmission plan furthers the FHA’s goals to takeaction to further integration and avoid segregationafter demolition and redevelopment of low incomehousing at a specific site); Shannon v. U.S. Dep't of

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Hous. & Urban Dev., 436 F.2d 809 (3d Cir. 1970)(before HUD could approve a change in the type ofhousing included in a site-specific redevelopmentplan, HUD must be provided with information by thelocal planning authority sufficient to answer whetherfair housing was being furthered).

HUD fulfills its statutory duty under Section3608, in part, by requiring its funding recipients toaffirmatively further fair housing, in addition torequiring them to comply with other civil rights lawsthrough refraining from discrimination. 24 C.F.R.§§ 5.150 - 5.180 (2015). HUD, in stating the purposeof the regulations it promulgated to implement theAFFH obligation, emphasizes the FHA’s goals toaddress the effects of discrimination on communities.HUD declares that the purpose of the AFFHregulations is “to aid program participants in takingmeaningful actions to overcome historic patterns ofsegregation, promote fair housing choice, and fosterinclusive communities that are free fromdiscrimination.” § 5.150. Cities and municipalitiesare such program participants. Their legal obligationto affirmatively further fair housing under Section3608 flows from their receipt of housing anddevelopment funding from HUD and other federalagencies; the obligation starts at the federal door, butmunicipalities share in it as they partner with HUDand other federal agencies. Id. Through its AFFHregulations, HUD seeks to provide “an effectiveplanning approach,” establishing “specificrequirements for the development and submission ofan Assessment of Fair Housing (AFH) by programparticipants.” Id. Neither Congress nor HUD dictate

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the minutia of how a municipality should further fairhousing, which would render the concept ofcomprehensive planning and community inputmeaningless. §§ 5.150 - 5.180. Instead, HUDrequires the locality to analyze its own ordinancesand policies to determine if they create impedimentsto fair housing and to explain how its priorities andgoals are designed to overcome their effects. SeeCounty of Westchester v. U.S. Dep't of Hous. & UrbanDev., 802 F.3d 413, 434 (2d Cir. 2015). HUD alsorequires the municipality to take “significant actions”towards affirmatively furthering fair housing. 24C.F.R. § 5.152.

The Community Development Block Grant(CDBG) program is HUD’s largest and mostsignificant grant program subject to AFFHobligations. See 42 U.S.C. §§ 5301–5317 (2006)(creating the CDBG program); see also Robert G.Schwemm, Overcoming Structural Barriers toIntegrated Housing: A Back-to-the-Future Reflectionon the Fair Housing Act's "Affirmatively Further"Mandate, 100 Ky. L.J. 125 (2012). It provides annualgrants on a formula basis to cities in metropolitanareas with a population of 50,000 or more, principalcities of metropolitan areas, or urban counties with apopulation of at least 200,000 (excluding thepopulation of metropolitan cities located therein).Off. of Block Grant Assistance, U.S. Dep't of Hous. &Urban Dev., Basically CDBG 1-4 (May 2014),https://www.hudexchange.info/resources/documents/Basically-CDBG-Chapter-1-Overview.pdf. In fiscalyear 2016 Congress provided $2.1 billion in formulagrants to localities. Cmty. Planning and Dev., U.S.

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Dep't of Hous. & Urban Dev., CPD AppropriationsBudget, http://portal.hud.gov/ hudportal/HUD?src=/program_offices/comm_planning/about/budget (lastvisited Oct. 5, 2016). As an example, Miami received$18.8 million in CDBG and other HUD funds that aresubject to AFFH obligations and planningrequirements. Miami Dep’t of Cmty. & Econ. Dev.,Consolidated Annual Performance & EvaluationReport 2 (Fiscal Year 2013 – 2014) http://www.miamigov.com/communitydevelopment/Docs/Reports/CAPERFINALFY1314.pdf.

A city’s failure to address predatory lending inan effective manner as part of its AFFH obligationsmay lead to compliance actions by HUD. HUD canenforce a city’s failure to meet its AFFH obligationusing its existing compliance processes under, forinstance, the FHA and Title VI of the Civil RightsAct, 42 U.S.C. §§ 2000d-2000d-7, or it can followprocedures specifically set out in relation to certainHUD funded programs. 24 C.F.R. pt. 91 and 903.Compliance actions can include steps from providingtechnical assistance to withholding of HUD’s federalfunding from the municipality. See Westchester, 802F.3d at 413 (holding that HUD could under the FHAproperly withhold all the county’s communityplanning and development funds, because the countyfailed to submit a minimally adequate analysis ofimpediments to fair housing regarding the zoningand land use laws of the jurisdictions within it, afterHUD had provided numerous warnings and detailedwritten expert explanations).

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HUD, in its AFFH assessment tool, requiresthat municipalities identify if lending discriminationis present in their community as a contributing factorto segregation, lack of access to opportunity ordisproportionate housing needs. U.S. Dep’t of Hous.and Urban Dev., Affirmatively Furthering FairHousing Assessment Tool: Announcement of FinalApproved Document, 80 Fed. Reg., 81840, 81851(Dec. 31, 2015) (Assessment Tool available at:https://www.hudexchange.info/ resources/ documents/Assessment-of-Fair-Housing-Tool.pdf).4 This is anissue cities must address because “one of theconcomitant, latent effects of inequitable lending isthe furtherance of racial segregation.” Aleatra P.Williams, Lending Discrimination, the ForeclosureCrisis and the Perpetuation of Racial and EthnicDisparities in Homeownership in the U.S., 6 Wm. &Mary Bus. L. Rev. 601, 635 (2015). HUD has longrequired grantees to analyze local home mortgagedata for any discrepancies that exist by race andneighborhood. See U.S. Dep’t of Hous. and UrbanDev., Fair Housing Planning Guide §§ 2-9, 3-8, 4-2(1996), http://www.hud.gov/offices/fheo/images/fhpg.pdf. “Frequently, the terms offered to Blacks or otherminority borrowers have been less favorable thanthose offered to nonminority borrowers.” Id. § 5-21.

4 HUD has provided other guidance to cities and grantees toassist them in fulfilling their AFFH obligations. See, e.g., U.S.Dep’t of Hous. And Urban Dev., Affirmatively Furthering FairHousing Rule Guidebook (Dec. 31, 2015), https://www.hudexchange.info/resources/documents/AFFH-Rule-Guidebook.pdf, AFFH Data and Mapping Tool, https:// www.hudexchange.info/resource/4867/affh-data-and-mapping-tool/ (tool and userguide provided at bottom of page under “Resource Links”).

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Moreover, “the less favorable terms have been theonly ones available in the neighborhoods in which theminority borrowers reside, or in which the dwellingsthey plan to purchase are located. These most oftenhave been minority neighborhoods.” Id. Once suchdiscrepancies were identified, HUD required thatsteps be taken to address them. For instance, HUDsuggested an acceptable action step could be to enterinto a negotiated agreement with a bank to refrainfrom further discrimination and provide otherremedies. Id. § 4.11. A city might also pursue astrategy of seeking a remedy through litigationagainst banks that have engaged in discriminatorylending, as Miami is doing in this case. See, e.g.,Mayor of Baltimore v. Wells Fargo Bank, N.A., 2011U.S. Dist. LEXIS 44013 (D. Md. Apr. 22, 2011)(holding that Baltimore’s allegations were sufficientto establish standing to enforce the FHA and denieda motion to dismiss).5

5 In settling the case, Wells Fargo agreed to provide $4.5million in direct down payment assistance to qualifyingBaltimore homebuyers and $3 million to the City to use forpriority housing and foreclosure-related initiatives. In addition,Wells Fargo has committed to making $425 million in primemortgage loans in Baltimore over the next five years, $125million of which will be in low and moderate incomeneighborhoods. See Relman, Dane & Colfax P.L.L.C., BaltimoreSettles Landmark Fair Lending Case Against Wells Fargo,http://www.relmanlaw.com/civil-rights-litigation/cases/Baltimore-v-wells-settlement.php#sthash.ZHx06jPu.dpuf (lastvisited Oct. 4, 2016).

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III. Cities Should Have Standing Underthe FHA to Hold Lenders Accountablefor the Public Harms and ForeseeableConsequences That Result from theirDiscriminatory Lending Practices.

A central purpose of the FHA is to address fairhousing at the geographic, place-based level. TheSupreme Court quoted Sen. Mondale, the FHA’sprincipal sponsor in the Senate, in its first FHAdecision as evidence of the FHA’s intent, “the reach ofthe proposed law was to replace the ghettos ‘by trulyintegrated and balanced living patterns.’”Trafficante v. Metropolitan Life Ins. Co., 409 U.S.205, 211 (1972) (quoting statement of Sen. Mondale,114 Cong. Rec. 3422 (1968)). Mondale believed theFHA reflects Congress’s commitment “to theprinciple of living together” and to promotingintegrated neighborhoods where residents ofdifferent races would live together in “harmony.” 114Cong. Rec. 2276 (1968). According to Senator Javits,the intended beneficiaries of the FHA were not onlyblacks and other minorities groups, but also “thewhole community.” 114 Cong. Rec. 9559 at 2706(1967). Congress included Section 3608 (e)(5),requiring HUD to affirmatively further fair housing,specifically to require that HUD “cure thewidespread problem of segregation in publichousing.” Clients’ Council v. Pierce, 711 F.2d 1406,1425 (8th Cir. 1983) (“Rarely does HUD withholdfunds or defer action in the name of desegregation”(quoting Senator Brooke, 114 Cong. Rec. 2527-2528)).

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Subprime lending practices have beenrecognized as having a disproportionately adverseeffect on minority neighborhoods since at least the1990’s. See Joint Report, supra, at 47. “[B]orrowersin upper-income black neighborhoods were twice aslikely as homeowners in low-income whiteneighborhoods to refinance with a subprime loan.” Id.at 48. Neighborhoods with the highest levels of theriskiest subprime lending had greater African-American or Hispanic populations than other areasof the city. Id. at 48. The Joint Report specificallyidentified reverse-redlining6 as an evolving problemto be addressed further, particularly under the FHA.Id. at 72. The Joint Report also demonstrated thatneighborhoods with a higher-than-averagecomposition of minority residents would face higherrates of foreclosure. See id. at 49-51. Finally, thereport noted that the harm from having foreclosedand abandoned properties in the community includedlowered property values, crime, and instability. Id. at51. Foreclosures also affect public health; one studyfound that the mere presence of foreclosed homes in aneighborhood is associated with increases in medicalvisits for physical and mental health conditions.Trawinski, supra, at 5. The number of completed

6 Reverse redlining is “the practice of extending credit onunfair terms” to communities that have been historically deniedaccess to credit, predominantly on the basis of race. Hargravesv. Capital City Mortg. Corp., 140 F. Supp. 2d 7, 20 (D.D.C.2000). See also, Williams, supra, at 607.

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foreclosures continues to be elevated above pre-financial crisis levels. Spader, supra.

The amount by which a foreclosed homereduces the value of a neighboring property rangesfrom 0.9 percent to 8.8 percent. Off. of Pol’y Dev. andRes., U.S. Dep’t of Hous. and Urban Dev., Vacantand Abandoned Properties: Turning Liabilities intoAssets, Evidence Matters (Winter 2014), https://www.huduser.gov/portal/periodicals/em/winter14/highlight1.html [hereinafter Vacant]. If the propertyis vacant or abandoned, it will have an even greatereffect on nearby property values. Id. Along with anincrease in crime, including assault, vacantproperties bring a whole host of other health andsafety problems that require expenditures of alocality’s resources, whether for demolition orrehabilitation. Id. Vacant properties bring rodentinfestations and fire and water damage to nearbyhouses. James J. Kelly, Jr., AffirmativelyFurthering Neighborhood Choice: Vacant PropertyStrategies and Fair Housing, 46 U. Mem. L. Rev.1009, 1027 (2016). These risks can make it difficultfor residents in the neighborhood to purchaseproperty insurance, or even obtain a mortgage. Id. Ifa bank owns the property taken by foreclosure, thelikelihood of discrimination based on race andnational origin continues in regard to the condition inwhich the property is maintained. See Nat’l FairHous. All., Zip Code Inequality: Discrimination byBanks in the Maintenance of Homes inNeighborhoods of Color (Aug. 27, 2014), http://www.mvfairhousing.com/pdfs/2014-08-27_NFHA_REO_report.PDF (finding that bank-owned

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properties in neighborhoods of color were about twiceas likely as homes in white neighborhoods to havesignificant amounts of trash and debris on theproperty, unsecured or broken doors or windows, andholes in the structure, than in white neighborhoods;bank-owned homes in white neighborhoods weremore likely to have a professional “for sale” sign).

As the Joint Report demonstrated in 2000,predatory lending practices result in a significantincrease in the rate of foreclosures in the targeted oraffected communities. See Joint Report, supra. As adirect result of those foreclosures, housing valuesnearby are reduced. See Vacant, supra. In addition,predatory lending practices must be addressed by thecity to further the goals of integration andaffirmatively furthering fair housing. 42 U.S.C.§§ 3601, 3608. Finding that a city, such as Miami,has standing thus furthers Congress’ intent that theFHA “provide, within constitutional limitations, forfair housing throughout the United States.” 42U.S.C. § 3601.

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CONCLUSION

The decision of the Eleventh Circuit should beaffirmed.

Respectfully submitted,

WILLIAM ALVARADO RIVERA

SUSAN ANN SILVERSTEIN

Counsel of RecordAARP FOUNDATION601 E STREET, NWWashington, DC 20049202 434-2060

October 7, 2016 Counsel for Amici Curiae