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Disparate impact standard

That phrase is back in the spotlight for housing Owners and Agents.

HUD published a disparate impact standard proposed rule on January 14, 2026. HUD proposes removing its “discriminatory effects” regulations. Those regulations are in 24 CFR part 100, Subpart G. Subpart G contains § 100.500. HUD also proposes deleting a sentence in § 100.5(b). That sentence says discrimination can be shown by “discriminatory effect,” even without  discriminatory intent. HUD states that the proposal does not change the requirements, and it does not affect rights or obligations. HUD’s intent is to leave interpretation questions to the courts.

The comment deadline is February 13, 2026.

If you screen applicants, set policies, market units, or enforce leases, this matters. HUD states the proposal does not change legal requirements. However, if the regulatory framework is removed, it may affect how practitioners document compliance and what written HUD regulatory framework they rely on. The Fair Housing Act still applies. Please contact your attorney if you have any questions.

Disparate impact standard: what the proposal changes

“Disparate impact” is about results. It is not about motivation. A policy can be neutral on its face. Yet it can still affect protected classes differently. Protected classes under the FHA include race, color, religion, sex, disability, familial status, and national origin. Since 2013, HUD used a structured regulatory framework. That framework helped explain how a claim is analyzed. Many describe it as “legally sufficient justification.”

HUD now proposes removing that framework from the CFR and cites two points for justification.

First, HUD cites executive orders addressing disparate-impact liability. The proposal cites a policy goal of eliminating disparate-impact liability “to the maximum degree possible.”

Second, HUD cites the Supreme Court’s Loper Bright decision. HUD notes courts no longer defer to agency interpretations of ambiguous statutes. The agency also argues that regulations like § 100.500 do not carry deferential weight.

Practical takeaway for Owners and Agents: HUD’s written test may disappear. Case law may matter more. Your compliance discipline still matters a lot.

Disparate impact standard: what stays risky for Owners and Agents

Even if HUD removes § 100.500, risk does not vanish. Courts can still recognize disparate impact under the Fair Housing Act. HUD’s document cites Inclusive Communities as the Supreme Court case that recognized such claims.

Because this is a proposed rule, the current regulations in Subpart G and  100.500 remain in effect unless and until HUD issues a final rule. HUD proposes to remove and reserve Subpart G in its entirety. That means you should not treat the proposal as final yet.

So what remains high-risk?

• Tenant screening rules stay high-risk. Credit thresholds can produce uneven outcomes. Criminal history screens and income standards can, too. While the policy may be neutral. The effect can still be unequal.
• Occupancy policies stay high-risk. A rigid standard, guest rules and parking rules can burden families.
• Marketing and leasing practices stay high-risk. Where you advertise, the language you use, and the images you choose matter. Waitlist practices do, as well.
• Disability compliance stays high-risk. Reasonable accommodations are still required. A neutral rule can still need an exception.
• Intentional discrimination also remains prohibited. Steering and other terms and conditions remain prohibited, as well as retaliation.

Keep in mind, a single HUD regulation is easier to follow, but a patchwork of court tests across jurisdictions may be more complex. That is why consistent compliance remains your safest approach.

Action steps for Owners and Agents right now

1. Start with your written standards. Keep them objective. Tie each standard to a real business purpose.
2. Test consistency. Staff must apply standards the same way. Undocumented exceptions create risk. Inconsistent “judgment calls” create risk.
3. Next, review common “silent barriers.”
   • Application fees and refund handling.
   • Credit, income, and rental history criteria.
   • Criminal history criteria and lookback periods.
   • Occupancy standards and bedroom assignment.
   • Waitlist order and local preference.
   • Transfer policies and unit offers.
   • Pet rules and assistance animal requests.
   • Language access and interpretation options.
4. Add documentation for each rule and write the purpose in plain language.
   • Keep supporting evidence where possible.
   • Use local data when available.
   • Comply with insurance or lender requirements when applicable.
5. Document alternatives you considered, as courts often ask about them. If a lighter policy works, adopt it; if it does not, document why.
6. Train staff with real scenarios.
   • Use short scripts.
   • Practice consistent explanations.
   • Teach when to escalate.
   • Teach when to pause a denial.
7. If you use third-party screening, ask hard questions.
   • Ask what data they use.
   • Ask how errors are corrected.
   • Ask how overrides are handled.
   • Document those answers.
8. If you operate HUD-assisted housing, ensure your documents are aligned.
   • Align house rules with your selection plan.
   • Align your accommodation process with your policy.
   • Align notices with your lease.
9. Finally, consider commenting on the proposal.
   • Comments can be operational.
   • Describe implementation impacts.
   • Ask for transition clarity.
   • You can also request guidance regarding the removal of § 100.500.

The comment deadline is February 13, 2026. Again, you should reach out to your attorney if you have questions about the disparate impact standard.