HUD Official’s Advice Irks Fair-Housing Group

WASHINGTON —  The Clinton administration is wrestling with an explosive issue that threatens to redefine what real estate agents can--and cannot--tell prospective home buyers about the racial and ethnic characteristics of neighborhoods.

Since the passage of the Fair Housing Act in 1968, realty agents nationwide have been trained to avoid discussions of racial or other features of neighborhoods that may be covered by the law’s anti-bias protections. The act prohibits discrimination in housing based on race, color, sex, familial status, handicap, religion or national origin.

But a controversial preelection opinion letter from the federal Department of Housing and Urban Development appears to open the door to a significant change in that 3-decades-old practice. According to an Oct. 2 opinion from HUD’s top fair-housing official, Elizabeth K. Julian, a home shopper represented by a buyer’s agent could ask that agent to restrict the home search solely to neighborhoods with no minorities, and the agent would remain in compliance with federal law in doing so.

“If a white buyer said to his [or] her agent,” wrote Julian in her opinion letter, “ ‘I want to live in a white neighborhood,’ or ‘Don’t show me any house where a lot of minorities live,’ the agent would not violate the [Fair Housing Act] if he [or] she acted upon his [or] her client’s instruction.”

However, according to Julian, if the agent either initiated the discussion of racial composition or made a comment supporting the client’s bias--such as, “I don’t blame you for wanting to live in a white neighborhood”--then the agent would violate the anti-discrimination law.

Julian’s opinion letter was sent to Jill D. Levine, a lawyer for Memphis, Tenn.-based the Buyer’s Agent Inc., a realty firm with franchise offices in 26 states. The firm’s agents exclusively represent purchasers; they do not list homes for sale and do not represent sellers in transactions. That distinction is critical, according to Levine, because unlike conventional agents, an exclusive buyer’s agent signs a legally enforceable agreement with the buyer that “includes fiduciary duties to act in the best interests of the buyer.”

When a purchaser instructs an exclusive buyer’s agent to “limit the search for properties” using criteria volunteered by the purchaser, the agent would violate his or her fiduciary duty to do otherwise, according to Levine.

Fair housing and civil rights groups reacted sharply to the Julian opinion letter once details of the apparent policy change circulated.

“We thought it was very disappointing,” said Shanna L. Smith, program director of the National Fair Housing Alliance. “Morally, ethically and legally, you don’t do anything that helps segregation in housing in America.”

For years, said Smith, “We have taught [realty] agents to say, ‘We’re not going to show you housing on any racial basis. If you want a three-bedroom or a four-bedroom home or a split-level, that’s fine--we’ll talk about that.’ ”

Smith, whose organization trains hundreds of Realtors across the country annually on how to comply with the fair housing law, said the Julian opinion letter opened up a Pandora’s box of potential complications unseen by HUD.

For example, what constitutes a “white” neighborhood, a “Jewish” neighborhood or an “Asian” neighborhood? Who makes that determination when a buyer asks to only see houses in such an area, she asked? And doesn’t this potentially work to the disadvantage of all types of people covered by the statute, including whites?

For example, Smith said, “If I were a white person trying to sell my house, and because there’s a black family living down the street, a buyer’s agent refuses to show my house, I’d be very upset.”

Following negative reactions like this, Julian sent a second letter to Levine on Oct. 28. Though her initial opinion “was given after extensive examination of the issue” by HUD’s office of general counsel and her own staff, according to Julian, she said that she has now referred the issue for further study to the Justice Department.

Julian also said that she wanted to make clear that even if an exclusive buyer’s agent could legally provide information on race, ethnicity and other criteria if requested by a client, “I do not endorse that sort of accommodation as good policy, nor as keeping within the spirit of the Fair Housing Act.

“I want to emphasize that there is nothing in the Fair Housing Act that requires an agent to accommodate an expressed desire to limit housing search based on race,” Julian wrote. “The fact that [the law] . . . may, under limited circumstances, not prohibit such accommodation does not make it right, does not make it ethical. . . .”

The National Fair Housing Alliance’s Smith said she wishes “this whole issue just never had come up.” The murkiness left in the wake of the two HUD letters has created uncertainty among some agents about their legal roles, according to Smith, and has prompted a new joke about Clinton administration fair housing policy: “Don’t ask, don’t tell, just nod.”

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Distributed by the Washington Post Writers Group.