Renters, homeowners, and mortgage borrowers have a variety of legal protections

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.

Key Takeaways

  • Numerous federal housing laws aim to protect homebuyers, owners, and renters from unfair practices.
  • Federal lending laws offer protections for mortgage borrowers.
  • State and local housing laws vary by location but do not supersede federal law.

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.


In addition to federal laws, many states and municipalities have their own sets of housing laws, often pertaining to tenants' rights. They also have building codes intended to ensure that housing is safe.

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.

Who Creates Housing Laws?

Federal housing laws are created by Congress, while state and local housing laws are established by their respective governmental bodies. In general, federal housing laws take precedence over state and local laws when the two conflict.

Who Enforces U.S. Housing Laws?

In most cases, the Department of Housing and Urban Development is responsible for enforcing federal housing laws. Other agencies such as the Department of Justice may get involved, as well.

Are Any Properties Exempt From Fair Housing Laws?

Yes, according to the U.S. Department of Housing and Urban Development, "owner-occupied buildings with four or fewer units, single-family homes sold or rented by the owner without the use of an agent, and housing operated by religious organizations and private clubs that limit occupancy to members" are exempt.

One way to combat pricing people out of affordable housing, a form of housing discrimination, is a community land trust (CLT). These are private, nonprofit organizations that own land on behalf of a community, promoting housing affordability and sustainable development and mitigating historical inequities in homeownership and wealth-building. 

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.

Article Sources
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  2. Federal Deposit Insurance Corporation. "Historical Timeline: The 1930's."

  3. U.S. Department of Housing and Urban Development. "Federal Housing Administration."

  4. Franklin D. Roosevelt Presidential Library and Museum. "75th Anniversary of the Wagner-Steagall Housing Act of 1937."

  5. Department of Housing and Urban Development. "HUD History."

  6. U.S. Department of Justice. "The Fair Housing Act."

  7. Consumer Financial Protection Bureau. "Regulation X - Real Estate Settlement Procedures Act,"

  8. Department of Housing and Urban Development. "Real Estate Settlement Procedures Act."

  9. CFPB. "TILA-RESPA Integrated Disclosures."

  10. Rocket Mortgage. "A Guide to TILA-RESPA Integrated Disclosures."

  11. Department of Housing and Urban Development. "HUD Implementation of the Recovery Act."

  12. U.S. Department of Housing and Urban Development, "Section 8 Program Background Information."

  13. U.S. Department of Housing and Urban Development. "Housing Discrimination Under the Fair Housing Act."