The Supreme Court agreed Monday to hear arguments in a case with major ramifications for fair lending enforcement against banks, Scotusblog reported.
The high court's decision to accept the case was a preliminary victory for lenders, who want the Supreme Court to rule on the legality of a theory that is central to many fair lending cases.
The case, which involves a redevelopment plan in a New Jersey town, will be scheduled for the Supreme Court's upcoming term. Any decision could be a year or so away, assuming the parties to the case do not settle out of court in the meantime.
Banks are pushing to overturn a legal theory that allows fair lending suits when there is no evidence that the lender intentionally discriminated against a particular racial or ethnic group, as long as the bank's policies had a disparate impact on minorities.
The suit that the Supreme Court agreed Monday to hear is known as Township of Mount Holly v. Mt. Holly Garden Citizens in Action.
It stemmed from a development plan that would displace residents of a predominantly minority neighborhood in Mount Holly, N.J. Residents sued, arguing that the plan violates the Fair Housing Act of 1968 because it would have a disparate impact on minorities.
Although the case does not involve lending, experts say that if the Court were to strike down the use of disparate impact theory under the Fair Housing Act, the ruling would likely affect fair mortgage lending cases.
Ultimately, a decision that is favorable to banks could also have an impact on fair lending enforcement involving other types of credit, including auto loans and credit cards.
