Housing Rights Initiative Files Massive Discrimination Case After Testing Finds Rampant Housing Discrimination Across Chicago Area

 

The Housing Rights Initiative (HRI) has filed a series of 176 complaints against 165 real estate agents, brokerages, and landlords in Chicago. The group claims that this is the largest housing discrimination case in Illinois history. The lawsuits are the result of an undercover investigation conducted by HRI. In total, the housing watchdog group filed 176 complaints against 165 defendants with the Illinois Department of Human Rights. Defendants in the suit include major brokerage companies such as Coldwell Banker, Christie’s International Real Estate, Keller Williams, and Berkshire Hathaway Home Services Chicago.

HRI is represented in these complaints by two public interest law firms, Peter Romer-Friedman Law PLLC and Handley Farah & Anderson PLLC, and by Disability Rights Advocates (DRA), a national nonprofit disability rights legal center with offices in Chicago, Berkeley, and New York.

An HRI testing project found that real estate professionals often declined to rent Chicago-area properties to investigators posing as low-income families. The HRI claimed that real estate agents, brokerage firms and landlords discriminated against prospective renters who sought to use vouchers provided through the federal rental assistance program known as Section 8. A group of investigators went undercover last year as prospective tenants, contacting hundreds of brokers and landlords by text message to determine whether they were complying with the Illinois Human Rights Act, which prohibits discrimination against people with housing vouchers. The group found that voucher holders were explicitly discriminated against about 36% of the time, according to a statement issued by the HRI. A range of real estate heavyweights were among the firms that allegedly broke the law.

Gov. JB Pritzker signed the Illinois Human Rights Act in 2022 (HB 2775), making it illegal for landlords, brokers, and agents to discriminate against housing applicants looking to use Section 8 or disability vouchers to help pay their rent. This historic filing builds upon that foundation by holding discriminatory real estate companies accountable and sending a message that landlords cannot refuse to rent to qualified low-income families in Illinois.

Peter Romer-Friedman, founder of one of the law firms (PRF Law) that filed the complaints, said the measure was drafted to “fill the gap” of the Fair Housing Act, a federal law that does not protect against so-called source of income discrimination. He said some of the complaints could be brought to court.

Emily Roznowski, DRA Staff Attorney, commented: “People with disabilities make up a disproportionate share of housing choice voucher holders. HRI’s investigation and the complaints filed today will ensure that people with disabilities in Illinois have access to the decent, safe, and accessible affordable housing of their choice. No one should be turned away from renting an apartment based on their source of income, whether that income comes from a voucher or Social Security Disability Insurance.”

Read the January 20,2025 WBEZ Chicago article.

Read the January2025 PRF Law article.

Fannie Mae Improves and Extends its "Expanded Housing Choice" Voucher Initiative Nationwide

 

Fannie Mae (FNMA/OTCQB) has announced improvements to its Expanded Housing Choice (EHC) initiative that: (1) make it available nationwide - including states with no source of income protections - for new loans to multifamily property owners who accept U.S. Department of Housing and Urban Development (HUD) Housing Choice Vouchers (HCVs); (2) increase eligibility thresholds to stimulate a more sustainable program; (3) streamline its data collection process; and (4) make its more transparent regarding inclusive renter screening requirements.  It was previously limited to eligible properties in North Carolina and Texas. These changes will support a more equitable housing market.

The Housing Choice Voucher federal program helps very-low-income families, senior citizens, and people with disabilities afford stable, quality housing in the private market. Fannie Mae’s Expanded Housing Choice initiative, begun in 2022 and extended through April 2026, is a pilot initiative to expand housing opportunities for HCV holders by incentivizing multifamily borrowers to accept vouchers as a valid source of income. Approximately 30% of voucher holders are unable to find housing that accepts their vouchers.

Multifamily property owners are now eligible if their property is not already legally required to accept HCVs and that at least 40% of units are affordable at or below HUD Fair Market Rents or Small Area Fair Market Rents. Borrowers and property managers who leverage EHC and accept HCVs can benefit from lower pricing, flexible loan terms, certain completion, lower turnover and vacancy rates, and a steady stream of competitive rent payments backed by HUD.  Fannie Mae's Delegated Underwriting and Servicing (DUS®) lenders partnered with it in the initiative.

For more information on Fannie Mae’s Expanded Housing Choice initiative, including background on the Housing Choice Voucher program, lender and borrower best practices, frequently asked questions, and more resources, go to FannieMae.com.

Read the October 15, 2024 Fannie Mae press release.

PD&R Quarterly In-Person & Virtual Update on Source of Income Discrimination will be on July 25th

 

On Thursday, July 25th, HUD's Office of Policy Development & Research (PD&R) will host a hybrid PD&R Quarterly Update on source of income (SOI) discrimination and laws. Over the past 20 years, evidence of discrimination against housing choice voucher holders has grown. Over half of voucher households live in states and localities that have adopted ordinances to prevent this kind of discrimination - such as Maryland. Go to the Source of Income Protections for Housing Choice Voucher Holders website of HUD’s Office of Public and Indian Housing to see jurisdictions that have adopted SOI protections.

Thursday, July 25, 2024
2:00-4:00 pm ET
Hybrid Event
HUD Headquarters
451 7th Street SW
Washington, DC 20410

                                             

Attending this HUD event will be researchers, municipal and state government officials, and fair housing practitioners. They will discuss recent passage of local anti-discrimination ordinances; evaluate research about the impacts of these anti-discrimination laws; and discuss challenges to the enforcement of these ordinances.

Data Spotlight - Veronica Helms Garrison, Analyst, PD&R/HUD

Panel Discussion: Overview of Source of Income Protections and What the Research Tells Us About Their Effectiveness - Panelists are:

• Martha Galvez, Executive Director, Housing Solutions Lab at the Furman Center, NYU.
• Philip Tegeler, Executive Director, Poverty & Race Research Action Council (PRRAC).
• Dan Teles, Principal Research Associate, Urban Institute.
• Moderator: Dr. Calvin Johnson, Deputy Assistant Secretary for Research, Evaluation, and Monitoring, PD&R/HUD.

Panel Discussion: Lessons from State and Local Implementation - Panelists are:

• Adria Crutchfield, Executive Director, Baltimore Regional Housing Partnership.
• Sandra Park, Chief of the Civil Rights Bureau, New York State Office of the Attorney General.
• Manon Vergerio, Co-Founder and Head of Data & Advocacy, Unlock NYC.
• Moderator: Chang Chiu, Chief of Staff for the Office of Fair Housing and Equal Opportunity, HUD.

• Home
• Registration
• Speaker Bios
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Source: Read the July 25, 2024 HUD announcement.

The Difficult Problem of Fighting Source of Income Discrimination

 

Over 2 million low-income families use Section 8 housing vouchers to cover their rent. The program is one of the federal government’s most effective, keeping more than 5 million individuals housed. Nationally, all vouchers are getting used. But housing voucher discrimination limits where exactly recipients can live. A household with a voucher sometimes discovers that the only willing landlords are in unsafe neighborhoods, or that they must need to move into a different school district to use the voucher. There also are a number of landlords who say that the reason why they're not renting to someone is because of the voucher when really it is because of their racial discrimination or discrimination on the basis of disability. 

To combat this, 17 states and dozens of cities and counties ban source-of-income discrimination covering almost 60% of renters. Enforcement of these laws, though, is lacking or spotty in many places. The best systems for enforcement include well-publicized outreach to property owners and the real estate community to inform them of the law and their obligations. 

The most powerful method of enforcement involves “testing,” in which a government agency or nonprofit organization submits two very similar rental applications to a property owner, with one application including a housing voucher and the other without. Authorities than can determine if discrimination possibly is suspected, and proceed with enforcement. Subsequent publicizing of those results and getting public judgments is important to show other property owners that the city or state is serious about voucher discrimination enforcement. 

However, such testing is expensive. Funding for housing discrimination testing comes primarily from HUD, which until February 12, 2024, did not give funding to its funded agencies to do sources-of-income discrimination investigations. This decision to fund HUD recipients is a positive development. Unfortunately, most agencies and nonprofits do not receive HUD funding, and cannot do testing because of the cost. Commitment and action by these authorities is also needed to reduce this stubborn problem.

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Read the Route Fifty January 31, 2024 article.

HUD Increases Efforts to Reduce Source of Income Discrimination

HUD recently took an important step forward to protect families with vouchers, authorizing the use of federal Fair Housing Assistance Program (FHAP) funds by state human rights agencies for testing and investigation of source of income discrimination cases. This follows a similar 2021 memo authorizing source of income discrimination testing and investigations at HUD funded fair housing centers.

Specifically, HUD informed organizations and agencies funded under HUD’s Fair Housing Assistance Program (FHAP) that funding can be used to support "source of income testing activities, source of income testing projects that are designed to uncover discrimination that violates the Fair Housing Act or substantially equivalent state or local fair housing laws.

In addition, HUD informed Fair Housing Initiatives Program (FHIP) grantees that FHEO will approve and pay for FHIP testing activities as long as they are designed to identify violations of the Fair Housing Act, whether they be instances of intentional discrimination, discrimination with unjustified discriminatory effects or less discriminatory alternatives, refusals to grant reasonable accommodations for persons with disabilities, or cases where discrimination erodes compliance with the duty to affirmatively further fair housing. Some state and local fair housing laws, which have been deemed by HUD as substantially equivalent to the federal Fair Housing Act, may include “source of income” or the like as a protected class. Testing for discrimination because of someone’s source of income could be funded with FHIP PEI funds because such discrimination can violate the Fair Housing Act.

This memorandum also clarifies that FHAP funds can be used to conduct source of income testing activities to detect discrimination that may violate the Fair Housing Act or substantially equivalent state or local fair housing laws. 

In accordance with 24 C.F.R Part 115, FHAP agencies are permitted to use HUD funds to enforce substantially equivalent local or state laws. FHAP agencies may use FHAP funds to conduct source of income testing as an investigative tool in processing dual-filed complaints. FHAP funds may also support source of income testing activities as part of special enforcement efforts, partnerships initiatives, or other fair housing projects developed by FHAP agencies to enforce state or local fair housing laws. 

HUD said that it is doing this because one specific type of source-of-income discrimination - based on someone’s use of a Housing Choice Voucher (HCV) - remains extremely high. This is important particularly because the HCV program is HUD’s primary program to assist very low-income families, elderly persons, and individuals with disabilities to afford decent, safe, and sanitary housing in the private housing market. Under the law, HCV participants can apply to any housing meeting HCV requirements are not located in subsidized housing projects. In practice, housing providers - especially those with units in low-poverty, well-resourced neighborhoods - often refuse to rent or sell to voucher holders. And because households who use HCVs are disproportionately Black, Hispanic, people with disabilities, families with minor children, and female-headed households, discrimination against voucher holders can violate the Fair Housing Act’s prohibition on discrimination because of protected characteristics, including but not limited to race, color, national origin, sex, disability, and familial status.

HUD regards fair housing testing as a critical investigative tool because it effectively detects hidden disparate treatment in housing practices. However, the Department urges FHAP agencies to not limit their testing and enforcement programs to intentional discrimination. HUD encourages testing activities designed to identify discrimination that violates the Act - through disparate treatment or unjustified discrimination. 

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Read HUD's February 12, 2024 Source of Income Discrimination Memorandum.

20 Boston-area landlords & property companies sued for discrimination

Housing Rights Initiative (HRI), a nonprofit housing watchdog group, has sued 20 Boston-area property companies and real estate brokers for allegedly discriminating against low-income tenants. The lawsuit, brought by the Lawyers for Civil Rights (LCR) and Handley Farah & Anderson, alleges landlords and brokers refused to rent to tenants with government-subsidized housing vouchers - which is illegal in Massachusetts. This is the first of its kind in Massachusetts.

LCR said in a statement that HRI used "testers" to act as prospective tenants requesting information about apartments. The companies and brokers at first "responded positively" to the inquiries, but then allegedly refused to accept housing vouchers, often called "Section 8" vouchers. Discrimination against voucher-holders continues patterns of de facto racial segregation among Boston neighborhoods, as residents of color thus must use housing subsidies solely in low-income areas with fewer public resources than predominant white neighborhoods.

The suit, filed in Suffolk Superior Court, includes photos of alleged conversations in which landlords and property brokers appear to tell prospective tenants they do not accept the vouchers. "One takeaway from our year-long investigation is that housing discrimination is alive and well in Boston," said Aaron Carr, HRI founder and executive director. He said the defendants named in the suit represent only "the tip of a very discriminatory iceberg," claiming many other landlords and brokers engage in similar practices.

The trade association MassLandlords commented that the state should provide better training to landlords on navigating housing laws and help simplify the process of renting to those with housing vouchers. None of the defendants appear to be members of the association.

HRI has brought similar lawsuits against real estate companies in New York City. "This is a national issue," Carr said, "but in Boston it seems particularly pronounced, which makes sense because Boston has a very tight market and in tight markets a lot of times you see shenanigans like this one."

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Read the February 21, 2024 WBUR article.

Click here to download the complaint.