Book Review: "The Containment: Detroit, the Supreme Court, and the Battle for Racial Justice in the North" by Michelle Adams

 

The Containment: Detroit, the Supreme Court, and the Battle for Racial Justice in the North by Michelle Adams. 528 pages. $35.00 hardcover.

"Splendid . . . Adams’s book explores class as well as race, with a richness and sophistication that recall J. Anthony Lukas’s 1985 masterpiece, Common Ground." - Jeffrey Toobin, New York Times Book Review.

This book relates Detroit's struggle to integrate schools in its suburbs and the associated struggle for desegregation in the North. In The Containment, Michelle Adams, the Henry M. Butzel Professor of Law at the University of Michigan, tells the history of the attempts to integrate Detroit schools, and the problems that followed when this effort collided with Nixon-appointed justices committed to a judicial counterrevolution. The book includes brief bios of the activists who tried to help Detroit's students during this period of riots, Black power, and white flight. In 1974, Federal District Judge Stephen Roth ruled that integration was not possible within the city's boundaries and ordered a new plan to include 53 of the 85 surrounding, mostly white, school districts. 

This metropolitan desegregation remedy could have remade the future direction of racial justice. Instead, the US Supreme Court on July 25, 1974 overruled the lower courts in ruling that the federal courts "could not impose a multidistrict, area-wide remedy upon local districts in the absence of any evidence those districts committed acts causing racial discrimination." The decision seriously impeded the struggle for forced desegregation both in Michigan and throughout the North, and limited the scope of the 1954 Brown v. Board of Education decision that declared state laws establishing separate public schools for black and white students unconstitutional.

Read the State Bar of Michigan's Michigan Legal Milestones historical article.

Read the full text of the Milliken v. Bradley decision.

Justice Department Files Civil Rights Lawsuit Against Iowa Landlord for Sexually Harassing Tenants

 

The US Department of Justice (DOJ) has filed a lawsuit against Kurt Williams and Gearhead Properties LC, of Davenport, Iowa, for sexually harassing female tenants in violation of the Fair Housing Act (FHA). Williams has managed residential rental properties in Davenport since at least 2010.

The lawsuit, filed in the U.S. District Court for the Southern District of Iowa, alleges that, since at least 2010, Williams subjected female tenants to unwelcome sexual contact, exposed his genitals to female tenants, made requests for sex in exchange for reduced rent or other housing benefits, and evicted tenants when they did not give in to his sexual advances.

“Landlords who target vulnerable women by repeatedly demanding sex for themselves and their friends and retaliating against those who refuse with eviction actions and refusals to make repairs show an egregious abuse of power,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The Justice Department remains committed to protecting tenants’ right to live in and access housing free of sexual harassment. We encourage survivors of sexual harassment to speak out so that we can vindicate their fair housing rights.”

The lawsuit seeks monetary damages to compensate persons harmed by the alleged harassment, civil penalties to vindicate the public interest, and a court order barring future discrimination. The lawsuit is the result of a joint investigative effort with the Department of Housing and Urban Development Office of Inspector General (HUD-OIG).

The FHA prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. It also prohibits sexual harassment, a form of sex discrimination. Individuals who believe that they may have been victims of sexual harassment or other types of housing discrimination at rental properties owned or managed by Kurt Williams or Gearhead Properties LC, or who have other information that may be relevant to this case, may contact the Justice Department by calling the U.S. Attorney’s Office for the Southern District of Iowa at (515) 473-9300. Individuals may also email the Justice Department at fairhousing@usdoj.gov or submit a report online. Reports also may be made by contacting HUD at 1-800-669-9777 or by filing a complaint online.

Read the January 17, 2025 DOJ press release.

The Mortgage Firm to Invest $1.75M to Settle DOJ Redlining Housing Discrimination Case

 

The Mortgage Firm, a Florida-based mortgage lender, has agreed to invest $1.75 million to settle a redlining case with the U.S. Department of Justice (DOJ), the parties announced. The DOJ accused the company of discrimination against predominantly Black and Hispanic neighborhoods in the Miami-Fort Lauderdale-West Palm Beach metropolitan area. The company ‘significantly underperformed’ its peers in generating applications from majority-Black and majority-Hispanic neighborhoods during 2016-2021. The complaint, filed in the Southern District of Florida, alleges violations of the Fair Housing Act and Equal Credit Opportunity Act. DOJ opened an investigation into The Mortgage Firm’s lending practices after receiving a referral from the Consumer Financial Protection Bureau. 

A spokesperson at The Mortgage Firm told HousingWire that “throughout its 29-year history, the company has been committed to providing equal credit access to all communities within its lending footprint. The complete absence of legal or regulatory violations on The Mortgage Firm’s record speaks for itself.”

The company received 9,375 mortgage applications during 2016-2021, of which 30.4% were from residents of majority-Black and majority-Hispanic neighborhoods. Its peers’ share was 59%. The complaint also pointed out that the company had its offices located predominantly in white neighborhoods and took inadequate steps to market to and develop referral networks within Black and Hispanic neighborhoods.

The proposed consent order, which awaits court approval, would require The Mortgage Firm to:

• Conduct a Community Credit Needs Assessment to identify the credit needs of residents of predominantly Black and Hispanic neighborhoods in the Miami MSA and to consider the results in developing future loan programs, marketing campaigns, and outreach efforts.
• Provide $1.75 million for a loan subsidy program to offer affordable home purchase, refinance, and home improvement loans in predominantly Black and Hispanic neighborhoods in the Miami MSA. The program may provide lower interest rates, down payment assistance, closing cost assistance, or payment of initial mortgage insurance premiums.
• Conduct a detailed assessment of its fair lending program in the Miami MSA regarding fair lending obligations and lending in predominantly Black and Hispanic neighborhoods.
• Enhance its fair lending training and staffing to ensure equal access to credit is provided across their market area, including by employing a Director of Community Lending.
• Expand its outreach and advertising efforts by having an office location in a majority-Black and Hispanic neighborhood in Miami-Dade County, translating its website into Spanish, and requiring all of its loan officers in the Miami MSA to market to majority-Black and Hispanic neighborhoods.
• Bolster connections with the community and build referral sources in predominately Black and Hispanic neighborhoods by providing four outreach events annually, six financial education seminars per year, and partnering with at least one community partners to increase access to credit in predominately Black and Hispanic neighborhoods in the Miami MSA.

A copy of the complaint, proposed consent order, and information about DOJ’s fair lending enforcement work, is at www.justice.gov/fairhousing. Anyone may report lending discrimination by calling DOJ’s housing discrimination tip line at 1-833-591-0291 or submitting a report online.

Read the January 9, 2025 HousingWire article.

Read the January 7, 2025 DOJ press release.

Housing Rights Initiative Files Massive Discrimination Case After Testing Finds Rampant Housing Discrimination Across Chicago Area

 

The Housing Rights Initiative (HRI) has filed a series of 176 complaints against 165 real estate agents, brokerages, and landlords in Chicago. The group claims that this is the largest housing discrimination case in Illinois history. The lawsuits are the result of an undercover investigation conducted by HRI. In total, the housing watchdog group filed 176 complaints against 165 defendants with the Illinois Department of Human Rights. Defendants in the suit include major brokerage companies such as Coldwell Banker, Christie’s International Real Estate, Keller Williams, and Berkshire Hathaway Home Services Chicago.

HRI is represented in these complaints by two public interest law firms, Peter Romer-Friedman Law PLLC and Handley Farah & Anderson PLLC, and by Disability Rights Advocates (DRA), a national nonprofit disability rights legal center with offices in Chicago, Berkeley, and New York.

An HRI testing project found that real estate professionals often declined to rent Chicago-area properties to investigators posing as low-income families. The HRI claimed that real estate agents, brokerage firms and landlords discriminated against prospective renters who sought to use vouchers provided through the federal rental assistance program known as Section 8. A group of investigators went undercover last year as prospective tenants, contacting hundreds of brokers and landlords by text message to determine whether they were complying with the Illinois Human Rights Act, which prohibits discrimination against people with housing vouchers. The group found that voucher holders were explicitly discriminated against about 36% of the time, according to a statement issued by the HRI. A range of real estate heavyweights were among the firms that allegedly broke the law.

Gov. JB Pritzker signed the Illinois Human Rights Act in 2022 (HB 2775), making it illegal for landlords, brokers, and agents to discriminate against housing applicants looking to use Section 8 or disability vouchers to help pay their rent. This historic filing builds upon that foundation by holding discriminatory real estate companies accountable and sending a message that landlords cannot refuse to rent to qualified low-income families in Illinois.

Peter Romer-Friedman, founder of one of the law firms (PRF Law) that filed the complaints, said the measure was drafted to “fill the gap” of the Fair Housing Act, a federal law that does not protect against so-called source of income discrimination. He said some of the complaints could be brought to court.

Emily Roznowski, DRA Staff Attorney, commented: “People with disabilities make up a disproportionate share of housing choice voucher holders. HRI’s investigation and the complaints filed today will ensure that people with disabilities in Illinois have access to the decent, safe, and accessible affordable housing of their choice. No one should be turned away from renting an apartment based on their source of income, whether that income comes from a voucher or Social Security Disability Insurance.”

Read the January 20,2025 WBEZ Chicago article.

Read the January2025 PRF Law article.

HUD's Evaluation of the Rental Assistance Demonstration (RAD) Choice Mobility Option Finds Residents More Satisfied with New Neighborhoods

 

In a 2023 report, researchers examined residents’ experiences with the Choice Mobility option, which allows residents of public housing undergoing a RAD conversion to request a tenant-based (rather than project-based) voucher in order to move to a private rental market unit. Researchers found that although overall use of the Choice Mobility option is low, the program succeeds in providing the opportunity for residents to move to neighborhoods and into units that better serve their needs. 

To better understand the perspectives and experiences of residents, the study included a survey administered in 2022 of a representative sample of former RAD residents who chose to use the Choice Mobility option and a representative sample of RAD residents who were eligible to move using the Choice Mobility option but did not. Respondents completed 704 surveys in English and 16 surveys in Spanish, with an overall response rate of 49.6%. The study also used HUD administrative data and Census data to understand the demographic, neighborhood, and housing market characteristics of Choice Mobility use and resident outcomes.

Researchers found that both residents who move and residents who remain in their units are generally satisfied with both their housing and their neighborhood. Movers, however, were more satisfied than non-movers, with 70% of movers reporting that they were very or somewhat satisfied with their current neighborhood, compared to the 56% of non-movers. 

Movers reported that the amenities in their new neighborhoods - such as parks, schools, transit, and grocery stores - were at least the same as (40%) or better than (47%) the amenities at the RAD-converted properties. By contrast, only 7% of movers reported that the amenities in their new neighborhood were worse than those in their former neighborhood. These results reinforce the finding that neighborhood characteristics were the most commonly cited factor influencing resident use of the Choice Mobility option. The appeal of a neighborhood that better fits a household's needs was strong enough to overcome some increased costs; movers reported higher rent and utility costs than did non-movers, because movers tended to relocate to neighborhoods with lower poverty rates than the neighborhoods where their RAD unit was located. About two-thirds of movers and non-movers rated their current unit's physical condition as excellent or good and 10% or less rated the condition as poor.

The study results also reveal that more residents could potentially benefit from improved communication from public housing authorities (PHAs) about the Choice Mobility option, especially in RAD project-based rental assistance (PBRA) properties, and from more housing mobility-related supports.

Read the January 25, 2025 HUD User PD&R Edge article.

CFPB Files Lawsuit to Stop Illegal Kickback Scheme to Steer Borrowers to Rocket Mortgage

The Consumer Financial Protection Bureau (CFPB) has sued Rocket Homes  to stop them from providing incentives to real estate brokers and agents in exchange for steering homebuyers to Rocket Mortgage, LLC for loans. The CFPB also sued Jason Mitchell, his real estate brokerage firm, JMG Holding Partners LLC, which does business as The Jason Mitchell Group, and the individual real estate brokerage companies in the 41 states and the District of Columbia where it does business (The Mitchell Group), for their role in the unlawful scheme. Rocket Homes pressured real estate brokers and agents not to share valuable information with their clients about products not offered by Rocket Mortgage, such as the availability of down payment assistance programs which often save homebuyers money. The CFPB is suing Rocket Homes, The Mitchell Group, and Jason Mitchell to stop the kickback scheme, provide consumer redress, and obtain a civil penalty which will be deposited into the CFPB’s victims relief fund.

Rocket Homes Real Estate, LLC is incorporated in Michigan and is an affiliate of Rocket Companies, Inc. (NYSE: RKT), which also operates Rocket Mortgage, one of the largest mortgage lenders. Rocket Homes’ main office and principal place of business is in Detroit, Michigan. Rocket Homes operates a referral network throughout the country that matches consumers with real estate brokerages. The Jason Mitchell Group is primarily located in Scottsdale, Arizona and has 45 affiliated real estate brokerages in 41 states and the District of Columbia.

The CFPB’s investigation found that Rocket Homes gave referrals and other incentives to real estate brokerages under an agreement/understanding that the real estate brokers and agents would refer real estate settlement business to Rocket Mortgage and a separate Rocket affiliate called Amrock, which handles title, closing, and escrow services. The investigation also found that The Mitchell Group referred thousands of clients to Rocket Mortgage and Amrock. Jason Mitchell offered “Dog Bone” awards of $250 gift cards to Mitchell Group agents who made the most referrals to The Mitchell Group’s favored partners, including Rocket Mortgage and Amrock.

Specifically, the CFPB alleges that Rocket Homes violated the Real Estate Settlement Procedures Act by:

(1) Providing kickbacks in exchange for referrals: Rocket Homes gave incentives, such as home-buyer referrals and priority for future homebuyer referrals from the network, in exchange for brokers’ and agents’ mortgage lending and settlement service referrals.

(2) Requiring brokers and agents to steer consumers toward Rocket Mortgage: Rocket Homes required that the brokers and agents receiving its referrals “preserve and protect” the relationship between the consumer and Rocket Mortgage by steering clients from other competing lenders and preventing brokers and agents from sharing valuable information with their clients concerning products not offered by Rocket Mortgage, including the availability of programs that provide assistance for a borrower’s down payment; and

(3) The Mitchell Group and Jason Mitchell allegedly participated in Rocket’s illegal kickback and steering scheme. The Mitchell Group encouraged its network of real estate brokers and agents to engage in coercive tactics to get consumers to use Rocket Mortgage for their home loans. Agents were trained to suggest that house settlements could fall through if the homebuyer wanted to comparison shop with Rocket Mortgage’s competitors.

The CFPB’s lawsuit against Rocket Homes, The Mitchell Group, and Jason Mitchell seeks to stop alleged unlawful conduct, redress for harmed borrowers, and the imposition of a civil money penalty, which would be paid into the CFPB’s victims relief fund.

Read the CFPB complaint against Rocket Homes, The Mitchell Group, and Jason Mitchell.

Read the December 23, 2024 CFPB press release.

CFPB Takes Action Against Draper & Kramer Mortgage for Discriminatory Mortgage Lending Practices

 

The Consumer Financial Protection Bureau (CFPB) has alleged that Draper & Kramer Mortgage Corporation (Draper) committed discriminatory mortgage lending activities by discouraging homebuyers from applying to Draper for homes in majority-Black and Hispanic neighborhoods in the greater Chicago and Boston areas. The CFPB alleges that Draper located all its offices in majority-white neighborhoods, concentrated its marketing in majority-white neighborhoods, and avoided marketing to majority-Black and Hispanic areas. This resulted in disproportionately low numbers of mortgage loan applications and mortgage loan originations from majority-Black and Hispanic neighborhoods in Chicago and Boston compared to other lenders. If entered by the court, the proposed order would ban Draper from engaging in residential mortgage lending activities for five years, and require the lender to pay a $1.5 million civil money penalty into the CFPB's victims relief fund.

The CFPB alleges that, from 2019-2021, Draper redlined majority-Black and Hispanic neighborhoods in the greater Chicago and Boston areas, resulting in it significantly underperforming its peers in lending activity to these areas. Draper discouraged mortgage applicants from making or pursuing an application for credit on the basis of race, color, and national origin, violating the Equal Credit Opportunity Act and Regulation B.

Specifically, the CFPB alleges that Draper violated the law by:

(1) Intentionally focusing mortgage lending activities in majority-white neighborhoods and excluding Black and Hispanic neighborhoods: Draper had no offices, no loan officers, and virtually no marketing or outreach in majority- or high-Black and Hispanic neighborhoods in Chicago and Boston. Draper did not assign any loan officers to solicit applications in majority-Black and Hispanic communities and failed to train or incentivize its loan officers to lend in these communities. Draper's outreach and marketing targeted majority-white neighborhoods and largely avoided majority-Black and Hispanic neighborhoods; and 

(2) Discouraging mortgage applicants from pursuing properties in majority-Black and Hispanic neighborhoods: Draper's business model discouraged borrowers from applying for loans to purchase property in these neighborhoods. Draper's peer lenders had applications for properties in majority-Black and Hispanic areas in the Chicago metro at over two and-a-half times the rate and in the Boston metro area at three times the rate that Draper generated such applications. Draper also originated disproportionately low amounts of mortgage loans for properties in these neighborhoods, with peers in Chicago and Boston originating two and-a-half times more loans than Draper in majority-Black and Hispanic neighborhoods.

If entered by the court, the CFPB order would require Draper to: (1) Cease residential mortgage lending activities for five years: Draper cannot perform any residential mortgage lending activities, nor receive any compensation for any residential mortgage lending; and (2) Pay a $1.5 million civil penalty to the CFPB's victims relief fund.

Consumers can submit complaints about financial products and services by visiting the CFPB's website or by calling (855) 411-CFPB (2372).

Employees who believe their company has violated federal consumer financial protection laws are encouraged to send information about what they know to whistleblower@cfpb.gov. To learn more about reporting potential industry misconduct, visit the CFPB's website.

Read today's proposed order.

Read the January 17, 2025 CFPB press release.