Guide to U.S. Housing Laws

One of the most enduring aspects of the "American Dream" has been the importance of homeownership. Owning a home can provide financial stability and a way to build wealth over time in the form of home equity. In the United States, homebuyers and owners, as well as renters, are covered by a set of laws intended to protect them from discrimination and unfair lending practices.

Five Important U.S. Housing Laws

Though there are numerous federal housing laws on the books, these five were among the most groundbreaking and remain among the most important.

National Housing Act of 1934

Passed in 1934, the National Housing Act was created to help support the residential housing market and home construction industry as part of President Franklin D. Roosevelt's New Deal. Considered a major key to the country's recovery efforts during the Great Depression, the National Housing Act created the Federal Housing Administration (FHA), which instituted a mortgage insurance program backed by the federal government. That insurance reduced the risk to lenders, who could then make loans available to Americans who might not otherwise qualify. The program continues to this day, with FHA-backed loans still providing affordable mortgage options to eligible buyers of single-family and multifamily homes.

Housing Act of 1937 (Wagner-Steagall Act)

The Housing Act of 1937, also known as the Wagner-Steagall Act after its principal sponsors, established the United States Housing Authority (USHA). Its role was to provide federal loans to state and local housing authorities for the construction of low-income housing in both large and small cities across the U.S. The USHA became part of the Department of Housing and Urban Development in 1965.

Fair Housing Act of 1968

Passed as part of the Civil Rights Act of 1968 and amended several times since, the Fair Housing Act makes it illegal for landlords, real estate companies, municipalities, or lending institutions to discriminate based on race or color, religion, sex, national origin, familial status, or disability.

Under the Fair Housing Act, the Department of Justice can file suit if it believes "there is evidence of a pattern or practice of discrimination or where a denial of rights to a group of persons raises an issue of general public importance." Individuals can file a complaint with the Department of Housing and Urban Development or file their lawsuits in federal or state courts.

Though the Fair Housing Act is considered a landmark law, the Department of Justice admits that "more than 30 years later, race discrimination in housing continues to be a problem" and says that the majority of cases it files under the law involve racial discrimination rather than any other type.  

Real Estate Settlement Procedures Act of 1974

This federal act, referred to as RESPA, was passed by Congress in 1974 to prohibit potentially abusive practices in the real estate settlement process. For example, it requires lenders, mortgage brokers, and loan servicers to provide borrowers with several disclosures, including an itemized statement of all settlement or closing costs. It also outlaws kickbacks and referral fees and prohibits loan servicers from requiring excessively large escrow accounts, among other provisions. After 2011, RESPA responsibilities were assumed by the CFPB because of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The Consumer Financial Protection Bureau provides a series of guidelines, TRID, to protect borrowers from unscrupulous lenders. Commonly known as the "know before you owe" rules, the TILA-RESPA integrated disclosures (TRID) dictate the mortgage information that lenders need to provide to borrowers and when they must provide it. TRID rules also regulate what fees lenders can charge and how these fees can change as the mortgage matures. As of 2015, all mortgage lenders are required to follow TRID rules when they issue a mortgage or offer an estimate to a potential borrower.

American Recovery and Reinvestment Act of 2009

After the subprime mortgage meltdown and financial crisis of 2008, the U.S. government attempted to kick-start the economy through the passage of a more than $800 billion stimulus package. Though most of the package focused on other parts of the economy, it dedicated nearly $14 billion to housing. Of that amount, $4 billion went to the Department of Housing and Urban Development for repairing and modernizing public housing, $2 billion went for Section 8 housing rental assistance, and another $1.5 billion went to provide rental assistance to help fight homelessness.

The Basic Goals of U.S. Housing Laws

Though U.S. housing laws have addressed numerous issues over the years, many share these basic goals:

• To combat discrimination. Throughout American history, minority groups have often been the target of discrimination—in housing, employment, and other aspects of life. Racial discrimination has been a particularly onerous problem, which housing laws have attempted to address.
• To protect individual rights. U.S. housing laws work to protect the rights of tenants, mortgage borrowers, and homeowners. For homeowners, those rights include the so-called Bundle of Rights, which consist of "the right of possession, the right of control, the right of exclusion, the right of enjoyment, and the right of disposition."
• To combat homelessness. In addition to helping finance affordable housing, federal laws to alleviate homelessness include the Section 8 Program, authorized in 1974 to provide rent subsidies for eligible low-income individuals and families.

The Bottom Line

The United States has several housing laws intended to protect the rights of both renters and homeowners, particularly against discrimination based on race or other factors. Mortgage borrowers also have protections against unfair lending practices. States and municipalities have their housing-related laws, as well.