U.S Housing Laws: One long-lasting part of the “American Dream” is the idea that owning a home is really important. When you own a home, it can help you have a stable financial situation and a method to grow your wealth as the value of your home increases. In the United States, there are rules in place to make sure that people who want to buy a home, already own one, or are renting, are treated fairly and not discriminated against. These rules also make sure that lending practices are fair and not unjust.
Five Important U.S. Housing Laws
Though there are numerous federal housing laws on the books, these five were among the most groundbreaking and remain among the most important.
National Housing Act of 1934
Back in 1934, a law called the National Housing Act was made to help the housing market and building homes. This was part of President Franklin D. Roosevelt’s plan to fix things after the Great Depression, known as the New Deal. This law made something called the Federal Housing Administration (FHA), which started a special plan for home loans that the government supported with insurance.
Because of this insurance, lenders were less worried about losing money, so they could offer loans to people who might not normally qualify. This plan is still active today. It helps people who can’t afford expensive homes by offering them affordable loans for houses and apartments.
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Housing Act of 1937 (Wagner-Steagall Act)
The Housing Act of 1937, also called the Wagner-Steagall Act because of the main people who supported it, made something called the United States Housing Authority (USHA). The USHA’s job was to give money from the government to state and local housing groups so they could build homes for people with low incomes. They did this in big and small cities all over the U.S.
In 1965, the USHA became a part of the Department of Housing and Urban Development.
Source: “HUD History” from the Department of Housing and Urban Development.
Fair Housing Act of 1968
The Fair Housing Act, which was included in the Civil Rights Act of 1968 and has been changed a few times after that, says that it’s against the law for landlords, real estate companies, cities, or lenders to treat people unfairly because of their race or color, religion, sex, where they come from, if they have a family, or if they have a disability.
Source: “The Fair Housing Act” from the U.S. Department of Justice.
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According to the Fair Housing Act, the Department of Justice can take legal action if it believes there’s proof of unfair treatment happening regularly or if a group of people’s rights are being denied in a way that’s important to the public. People can also complain to the Department of Housing and Urban Development or take legal action in state or federal courts.
Even though the Fair Housing Act is seen as an important law, the Department of Justice says that even more than 30 years after it was made, unfair treatment based on race in housing is still a problem. They mention that most of the cases they bring up under this law are about racial discrimination, more than any other type of unfair treatment.
Real Estate Settlement Procedures Act of 1974
A law created by the government, known as RESPA, was made in 1974 to stop unfair practices during the process of settling real estate deals.
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For instance, this law says that lenders, mortgage brokers, and loan servicers have to tell borrowers about different things, like all the costs for closing the deal. It also says they can’t give or receive money for referrals and can’t make borrowers put too much money in escrow accounts.
This information comes from the Department of Housing and Urban Development’s “Real Estate Settlement Procedures Act.”
Starting from 2011, the CFPB started taking care of RESPA because of a law called the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The Consumer Financial Protection Bureau has a set of rules called TRID to guard borrowers from dishonest lenders. These rules, known as the “know before you owe” rules, tell lenders what information they have to give borrowers and when to give it. TRID rules also control the fees lenders can ask for and how these fees can change as time goes on. Since 2015, every mortgage lender must follow TRID rules when they give out a mortgage or tell someone how much it might cost.
Source: “Real Estate Settlement Procedures Act” from the Department of Housing and Urban Development.
American Recovery and Reinvestment Act of 2009
After the 2008 financial crisis caused by problems with subprime mortgages, the U.S. government tried to boost the economy. They did this by passing a big package of more than $800 billion. Even though most of the package was for other parts of the economy, around $14 billion was specifically set aside for housing.
Out of that $14 billion, $4 billion was given to the Department of Housing and Urban Development. This money was used to fix and update public housing. Another $2 billion was used for Section 8 housing, which helps people with their rent. And an extra $1.5 billion was used to give rental assistance to fight homelessness.
Source: “HUD Implementation of the Recovery Act” from the Department of Housing and Urban Development.
The Basic Goals of U.S. Housing Laws
Over the years, housing laws in the U.S. have dealt with many different problems. They all aim for these main things:
- Stopping discrimination: Throughout history, minority groups have often been treated unfairly in areas like housing and jobs. Racial discrimination has been a big issue, and housing laws have tried to fix this.
- Defending people’s rights: U.S. housing laws make sure that renters, people who borrowed money for their homes, and homeowners have their rights protected. For homeowners, these rights include things like having control over their property and being able to enjoy it.
- Helping with homelessness: Apart from helping make housing more affordable, federal laws also work to reduce homelessness. They do this through programs like the Section 8 Program, which began in 1974. This program gives money to people with low incomes so they can afford to rent a place to live.
Source: “Section 8 Program Background Information” from the U.S. Department of Housing and Urban Development.
Who Creates Housing Laws?
Congress makes the housing laws for the whole country, and each state and local area has their own government that makes housing laws for their place. Usually, if there’s a conflict between federal laws and state or local laws, the federal laws are more important and come first.
Who Enforces U.S. Housing Laws?
In most cases, the Department of Housing and Urban Development is responsible for enforcing federal housing laws. Other agencies such as the Department of Justice may get involved, as well.
Are Any Properties Exempt From Fair Housing Laws?
Certainly, as stated by the U.S. Department of Housing and Urban Development, buildings where the owner lives and has four or fewer units, single-family homes that the owner sells or rents out without using an agent, and places owned by religious groups and private clubs that only allow their members to live there are exceptions and don’t have to follow the rules.
The Bottom Line
The United States has many laws about housing. These laws are meant to make sure that people who rent homes and people who own homes are treated fairly. These laws are especially important to prevent discrimination based on things like race. People who borrow money to buy homes also have rules to protect them from being treated unfairly by lenders. Each state and city also has their own laws about housing.
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