Important U.S. Housing Laws

Various legal safeguards exist for renters, homeowners, and mortgage borrowers.

The importance of homeownership has been among the most enduring aspects of the "American Dream." Home ownership can provide financial security and a means to accumulate wealth through home equity. In the United States, a set of laws is in place to protect homebuyers, owners, and renters against discrimination and unfair lending practices.

Numerous federal housing laws are intended to protect homebuyers, owners, and renters against unfair practices.

State and local housing laws depend on the location but do not supersede federal law.

Five Important U.S. Housing Laws

These five federal housing laws were among the most innovative and continue to be among the most significant.

National Housing Act of 1934

As part of President Franklin D. Roosevelt's New Deal, the National Housing Act was passed in 1934 to support the residential housing market and home construction industry. During the Great Depression, the National Housing Act established the Federal Housing Administration (FHA), which established a federally-backed mortgage insurance programme. This was regarded as a major factor in the nation's recovery. This insurance reduced the risk for lenders, allowing them to extend credit to Americans who might not have otherwise qualified. FHA-backed loans continue to provide affordable mortgage options for eligible buyers of single-family and multifamily homes to this day.

Housing Act of 1937 (Wagner-Steagall Act)

The United States Housing Authority was established by the Housing Act of 1937, also known as the Wagner-Steagall Act after its chief sponsors (USHA). Its mission was to provide federal loans to state and local housing authorities for the development of low-income housing in both large and small U.S. cities. In 1965, the USHA was incorporated into the Department of Housing and Urban Development.

Fair Housing Act of 1968

The Fair Housing Act, which was passed as part of the Civil Rights Act of 1968 and has been amended numerous times since, makes it illegal for landlords, real estate companies, municipalities, and lenders to discriminate on the basis of race or color, religion, national origin, sex, familial status, or disability.

The Department of Justice may file a lawsuit under the Fair Housing Act if it finds "evidence of a pattern or practice of discrimination or where a denial of rights to a group of persons raise the issues of general public importance." Individuals can file their complaints with the Department of Housing and Urban Development (HUD) or in federal or state courts.

The Department of Justice grants that "more than 30 years after the passage of the Fair Housing Act, race discernment in housing continues to be a problem" and that, vast majority of the cases was filed under the law involving racial discrimination.

Real Estate Settlement Procedures Act of 1974

Congress enacted RESPA in 1974 to prohibit potentially abusive practices during the real estate settlement process.

7 For instance, it mandates that lenders, mortgage brokers, and loan servicers provide borrowers with multiple disclosures, including an itemized list of all settlement and closing costs. In addition, it prohibits loan servicers from requiring excessively large escrow accounts and prohibits kickbacks and referral fees. The CFPB assumed RESPA responsibilities after 2011 due to the Dodd-Frank Wall Street Reform and Consumer Protection Act.

TRID is a set of guidelines created by the Consumer Financial Protection Bureau to protect borrowers from predatory lenders. The TILA-RESPA integrated disclosures (TRID), also known as the "know before you owe" rules, dictate the mortgage information that lenders must provide to borrowers and when they must provide it. TRID rules also govern the fees that lenders can charge and how these fees can change over the life of the loan. As of 2015, all mortgage lenders must comply with TRID regulations when issuing a mortgage or providing an estimate to a prospective borrower.

American Recovery and Reinvestment Act of 2009

After the 2008 subprime mortgage crisis and financial crisis, the U.S. government attempted to stimulate the economy by passing a $800 billion stimulus package. Although the majority of the package focused on other economic sectors, nearly $14 billion was allocated to housing. The Department of Housing and Urban Development received $4 billion for the repair and modernization of public housing, $2 billion for Section 8 housing rental assistance, and $1.5 billion for rental assistance to combat homelessness.

In addition to federal laws, many states and municipalities have their own housing laws, which frequently pertain to the rights of tenants. In addition, they have building codes to ensure the safety of housing.

The Basic Goals of U.S. Housing Laws

Although U.S. housing laws have addressed a variety of issues over the years, many of them share the same fundamental objectives:

To combat discrimination

 Throughout American history, minority groups have frequently been subjected to housing, employment, and other forms of discrimination. Housing laws have attempted to combat racial discrimination, a particularly burdensome issue.

To protect individual rights

To safeguard individual rights Housing laws in the United States protect the rights of renters, mortgage borrowers, and homeowners. The so-called Bundle of Rights includes "the right of possession, the right of control, the right of exclusion, the right of enjoyment, and the right of disposition" for homeowners.

To combat homelessness

In addition to helping finance affordable housing, federal laws to combat homelessness include the 1974-authorized Section 8 Program, which provides rent subsidies to eligible low-income individuals and families.

Who Creates Housing Laws?

The federal housing laws are enacted by Congress, while state and local housing laws are enacted by the respective state and local governments. In the event of a conflict, federal housing laws typically take precedence over state and local laws.

Who Enforces U.S. Housing Laws?

Housing and Urban Development is typically responsible for enforcing federal housing laws. Other organizations, such as the Department of Justice, may also be involved.

Exist exemptions from the fair housing laws?

Yes, the U.S. Department of Housing and Urban Development exempts "owner-occupied buildings with four or fewer units, single-family homes sold or rented by the owner without the use of an agent, and housing operated by religious organizations and private clubs that limit occupancy to members."

A community land trust is one way to combat housing discrimination based on the cost of affordable housing, which is a form of housing discrimination (CLT). These are private, non-profit organizations that own land on behalf of a community, promoting housing affordability and sustainable development and reducing historical disparities in homeownership and wealth creation.

The Bottom Line

The United States has a number of housing laws designed to protect the rights of both renters and homeowners, particularly against racial and other forms of discrimination. Additionally, mortgage borrowers are protected from unfair lending practices. Additionally, states and municipalities have their own housing-related laws.