Mortgage Bankers Sue NJ Over New Disparate Impact Rule

The Mortgage Bankers Association (MBA) has filed a federal lawsuit challenging New Jersey's disparate impact discrimination rules, which were adopted in late 2025 under the state's Law Against Discrimination. The MBA argues the state's regulations are inconsistent with federal law and unconstitutional.

Lenders, housing providers, and other businesses in New Jersey face heightened litigation risk because the challenged rules allegedly make it easier to bring a disparate impact claim. The MBA's complaint asserts that the state's standard contravenes U.S. Supreme Court precedent by allowing claims based on broad statistics rather than an entity’s specific policy and by improperly shifting the burden of proof to the business to show that no less discriminatory alternative exists. The lawsuit further alleges the rules are preempted by the federal Fair Housing Act and Equal Credit Opportunity Act and violate the Equal Protection Clause.

Counsel for entities operating in New Jersey should monitor the litigation, as the MBA is seeking to permanently enjoin enforcement of the rules. The case could influence how other states approach anti-discrimination standards and burden-of-proof frameworks in fair lending and housing.