House hearing on fair-lending rules keeps spotlight on Facebook

Mortgage

A House Financial Services Committee hearing Tuesday on how to modernize fair-lending rules quickly turned into a sharp critique of Facebook’s advertising practices.

Members of both parties appeared open to updating the rules meant to prevent discrimination in light of social media’s impact on the housing and mortgage industries.

Rep. Maxine Waters, chairwoman of the House Financial Services Committee, blasted Facebook for practices that she said give advertisers a road map to discriminate against minorities. Last week, the Department of Housing and Urban Development sued Facebook for allegedly allowing advertisers to exclude consumers from viewing or receiving certain rental or housing advertisements. ProPublica first reported on the advertising practice in 2016.

House Financial Services Committee Chairwoman Maxine Waters

“Facebook provided advertisers including mortgage lenders, real estate agencies and housing developers with a map to exclude people who live in a specified area from seeing an ad by drawing a red line around the area,” said House Financial Services Committee Chairwoman Maxine Waters.

Bloomberg News

Waters charged that the company has engaged in modern-day redlining. She also criticized HUD for being “woefully behind” in understanding how discrimination works on social media platforms, and urged increased enforcement of the Fair Housing Act.

“Facebook provided advertisers including mortgage lenders, real estate agencies and housing developers with a map to exclude people who live in a specified area from seeing an ad by drawing a red line around the area,” Waters said. “This is eerily familiar to when the Federal Housing Administration drew red lines around black and brown communities, systematically starving them of access to capital and lending.”

Several members of the comittee said Congress needed to investigate further.

“We are in a new era of discrimination in both digital and social media,” said Rep. French Hill, R-Ark.

Facebook settled a lawsuit last year brought by four housing advocacy groups that alleged the company enabled landlords and real estate brokers to exclude a range of people — minorities, families with children, women and people with disabilities — from viewing certain housing ads.

“I don’t think this was intentional but it underlines the danger in the power given to these companies,” said Rep. Bill Foster, D-Ill. “It underlines the fact that Congress hasn’t been paying enough attention to the power of tech.”

Lawmakers at the hearing addressed a range of issues from restrictive zoning policies to Community Development Block Grants.

Several consumer advocates raised concerns that HUD halted the implementation last year of the 2015 Affirmatively Furthering Fair Housing rule that requires state and local governments to address segregated housing patterns as a condition for receiving HUD funding.

Debbie Goldberg, vice president for housing policy and special projects at the National Fair Housing Alliance, urged the committee to address the need for more funding for fair housing enforcement.

She said the increased use of technology, big data and artificial intelligence by housing providers has made discrimination more difficult to detect.

“Some have concluded wrongly that systems built on big data and sophisticated algorithms are objective and make it harder to discriminate,” Goldberg said. “If you can’t see what’s going on, and you don’t know what the algorithms do, you don’t know that discrimination is happening.”

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