Know—and Avoid—the Penalties for Fair Housing Non-Compliance

Hint: Stay current on HUD regulations, or risk a legal mess

Fair Housing

The Fair Housing Act has been around for 50 years, but U.S. Department of Housing and Urban Development (HUD) regulations are forever evolving. Which means your fair housing compliance efforts must too. Otherwise, the actual penalties you could face for compliance failure may come as a rude surprise.

Beware: In the assisted and public housing industry, even the most ordinary interactions with tenants and applicants can lead to serious legal trouble—and Fair Housing Act violations can cost you hundreds of thousands of dollars, according to housing expert Paul Flogstad in his Fair Housing Compliance & HUD Regulations Virtual Boot Camp.

Beware: Noncompliance Can Mean Fines & Mandated Training

If you’re going to avoid a legal mess and high fines, start by understanding the process fair housing complaints typically take.

What happens: HUD’s Office of Fair Housing and Equal Opportunity (FHEO) receives complaints, conducts investigations, and attempts to reach a conciliation or voluntary compliance agreement with the involved parties. In some situations, the FHEO will bring legal action, which is typically heard by a HUD Administrative Law Judge (ALJ). But the case can end up in a federal district court, prosecuted by the U.S. Department of Justice (DOJ), instead.

If the FHEO takes legal action against your organization, you could face liability for relief payments, such as victim compensation. HUD also often seeks a court order requiring the housing provider to undergo fair housing training and revamp its policies/procedures.

Keep in mind: The enforcement authority afforded under the Fair Housing Act is rather broad and can extend beyond the federal government. Many state and local fair-housing enforcement agencies also have the authority to investigate violations and bring enforcement actions, according to Leading Age.

Plus: You can face private lawsuits, which may yield compensatory and punitive damages.

Check Out New Civil Penalty Amounts: $50K Is Not Out of the Question

Heads up: HUD’s Office of the General Counsel recently adjusted the civil monetary penalty (CMP) amounts for inflation. In the July 16, 2018 Federal Register, HUD set forth the CMP amounts for a variety of violations, including fair housing-related penalties.

Cost: You could face a Fair Housing Act CMP of $20,521 for a violation if you have no prior violations. If you have one prior fair-housing violation, the penalty increases drastically to $51,302. And if you have two or more priors, the CMP doubles again to $102,606.

So you can see how the cost of fair housing mistakes can really start to add up!

Related violations and their associated CMPs are:

  • False Claims & Statements: $11,181
  • Advance Disclosure of Funding: $19,639
  • Disclosure of Subsidy Layering: $19,639
  • FHA Mortgagees and Lenders Violations: $9,819 per violation, $1,963,870 per year
  • Other FHA Participants and Violations: $9,819 per violation, $1,963,870 per year
  • Indian Loan Mortgagees Violations: $9,819 per violation, $1,963,870 per year
  • Multifamily & Section 202 or 811 Owners Violations: $49,096
  • Ginnie Mae Issuers & Custodians Violations: $9,819 per violation, $1,963,870 per year
  • Title I Broker & Dealers Violations: $9,819 per violation, $1,963,870 per year
  • Lead Disclosure Violations: $17,395
  • Section 8 Owners Violations: $38,159
  • Lobbying Violation: $19,639 minimum, $196,387 maximum
  • Manufactured Housing Regulations Violation: $2,852 per violation, $3,565,045 per year

Boost Your Fair-Housing Training

Here’s a smart idea: In addition to abiding by the Fair Housing Act, you should treat every tenant and applicant as if they work for HUD. After all, fair housing testers are out there, warns The Balance Small Business. Be careful what you say in person, on the phone, and in rental ads. Treat everyone with respect and dignity, and make sure you’re consistently using the same qualifying standards for every tenant.

Bottom line: Property owners, managers, maintenance staff, and even leasing agents must learn all there is to know about fair housing to stay compliant and avoid costly penalties, Flogstad advises. Understanding the HUD regulations and fair housing compliance penalties are crucial. In addition to enforcement and penalties, make sure your staff knows the protected classes, reasonable accommodation requirements, and the updated HUD regulations and rulings.

To join the conference or see a replay, order a DVD or transcript, or read more
About Sarah Terry
Sarah is a writer and editor with 13 years of experience in online and print publishing. She specializes in covering highly regulated industries, including healthcare, public housing, and banking. She is currently editor of the compliance publication Assisted Housing Alert.