FHA does not apply to a mortgagee’s decision to demand payment or commence foreclosure

In Davis v. Wells Fargo Bank, 07 C 2881, (N.D. Ill. Feb. 5, 2010) the Plaintiff plead that the Defendants discriminated against her by continuing to demand payment on the mortgage despite their knowledge that the initial mortgagee defrauded her. This conduct, she asserted, violated Sections 3604 and 3605 of the Fair Housing Act (FHA). Section 3604(a) makes it illegal, among other things, to refuse to sell or rent … or to otherwise make unavailable or deny, a dwelling to any person on the basis of race. Id. § 3604(a). Section 3604(b) more broadly bans discrimination against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith because of race. 42 U.S.C. § 3604(b). Section 3605(a) makes it unlawful for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms of conditions of such a transaction, because of race…. 42 U.S.C. § 3605(a). The Defendants argued that the claim does not implicate either section of the FHA because the Defendants did not enter into-or refuse to enter into-any loan with the Plaintiff. The court agreed. It concluded that Section 3605 applies only to transactions involving the making or purchasing of loans which the complained of conduct did not involve. Further, her assertion that Defendants’ efforts to foreclose on her home, along with their deplorable practice of assuming or servicing loans that are designed to fail, violates § 3604 could not be countenanced either. The court agreed with the Defendant that § 3604 does not protect … intangible interests in the already-owned property. Heeding recent Seventh Circuit authority, (_Bloch v. Frischholz_, 587 F.3d 771 (7th Cir.2009)) which left open the possibility that § 3604 may reach post-acquisition discriminatory conduct that makes a dwelling unavailable to the owner or tenant, somewhat like a constructive eviction, the court doubted that a mortgage holder with an apparent right to demand payment or pursue foreclosure could be liable under § 3604 for engaging in such conduct.