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Student Article


This Note will demonstrate that the FHA and ECOA prohibit implementation of lenders’ threats to limit or refuse credit availability because the result would have a disproportionate effect on minorities. This Note will examine the legality of the lenders’ threats to withhold credit and, in doing so, presumes that courts will find this novel use of eminent domain constitutional. First, Part II will discuss the current situation. Section IIA will explain eminent domain and explore precisely how cities hope to use it in the mortgage note context. Section IIB will describe the growth of this plan and the cities that have considered using it. Section IIC will elaborate on the threats that the lenders are making toward the cities that consider using eminent domain. Second, Part III will discuss the various laws that regulate consumer transactions and how they have restricted lenders in the past. Section IIIA will give a brief history of redlining and its consequences. Section IIIB will discuss the circumstances surrounding the enactment of the FHA and ECOA and exactly what actions these statutes prohibit. Section IIIC will discuss the three causes of action that arise under the FHA and the ECOA. Section IIID will further explore disparate impact and how courts have interpreted 24 C.F.R. Section 100.500, which was enacted on March 18, 2013.18 Lastly, Part IV will apply disparate impact to the lenders’ threats and work through the disparate impact analysis in detail to analyze the likelihood that the FHA and the ECOA will be successful in restricting the lenders’ threats.

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