“I’m so angry. Every time I talk about it I get emotional because I could have been dead. It was a life-to-death situation and nobody was trying to help me,” Mildred said, her voice sagging on the other end of the line.
A victim of domestic violence, she recounted desperately searching for a new place to live in Westchester County, New York. She had obtained a Section 8 housing voucher — a federal program that helps qualifying low-income tenants afford their rent — but just when she thought she’d found a new home for herself and her children away from her alleged abuser, she says she became the victim of discrimination. (Vox is withholding her full name and some identifying details to protect her privacy.)
Housing voucher recipients don’t just face the normal barriers to finding an affordable place to live. They can also face a little-known but insidious form of discrimination called “source of income discrimination,” where landlords refuse to rent to people with Section 8 housing vouchers or certain other types of legal income. While this type of discrimination is legal in most states, in 2019 New York passed a law banning the practice.
Yet it still happens in the state.
After Mildred told her landlord that she would be paying with a voucher, she and her lawyers say the landlord strung her along before taking the place off the market. She says it took her nearly four months to find a new place, all while living in fear of further abuse.
Stories like Mildred’s are what prompted a watchdog group called Housing Rights Initiative (HRI) to take action. On Wednesday, the group and the law firm Newman Ferrara are filing a suit — shared exclusively with Vox — in New York state court against 36 realtors, brokers, and landlords, including Keller Williams Realty and a franchise of the international firm Century 21, alleging source of income discrimination.
HRI spent eight months quietly running a systematic testing program, auditing landlords and realtors to weed out discriminatory agents and practices. Instead of just searching to find people like Mildred who believe they have experienced this type of discrimination, the organization followed in the long tradition of civil rights lawyers and organizations by sending testers to determine if housing providers were illegally discriminating against their clients. HRI hired and trained testers to call and text inquiring about available units, giving them profiles representative of low-income tenants like Mildred to see if agents were illegally discriminating. Despite New York’s statute prohibiting discrimination against Section 8 recipients, they say they found blatant forms of discrimination.
Out of hundreds of phone calls, HRI selected the cases where it found a realtor or landlord explicitly rejected a prospective tenant for inquiring whether they could pay with a voucher. But while landlords and realtors often ignore inquiries or in some other subtle way discourage tenants from pursuing a specific property, there are many more egregious forms of source of income discrimination.
“The one takeaway from our investigation is that housing discrimination is alive and well in the United States of America,” HRI’s executive director Aaron Carr told Vox.
Some of the defendants Vox spoke with claim they are exempt from the law (which HRI’s legal team disputes), and other experts say that landlords may be rejecting voucher holders due to bureaucratic concerns instead of bias against Section 8 recipients. The reasoning behind the alleged discrimination in New York is irrelevant to the legality of the actions, but such concerns nationwide provide important lessons in designing housing policy.
The most striking thing about the HRI phone calls, of which some of the audio is included throughout this article, is their banality. The people on the other end of the line don’t yell or utter racial or gendered epithets; they don’t even really express any hostility toward the undercover testers. In some cases, they even express sympathy. But that sentiment paired with the result of their words is jarring. In each of these cases, the defendant is denying a low-income tenant a place to live. And, HRI and its legal team argue, that’s not just personally devastating for the tenant, it may be illegal and even unconstitutional.
These phone calls paint a picture of discrimination in America that is so woven into the fabric of the housing market that some of these landlords and realtors felt free enough to put allegedly unlawful activity in writing. Sometimes the most devastating forms of discrimination are the ones that are hardest to recognize.
Sometimes discrimination is a quiet voice at the end of the line saying, “No, they’re not allowing any voucher programs in the unit, miss.”
LISTEN: Defendant EXIT Realty Group on the phone with undercover tester
The legal battle, briefly explained
The case, filed in New York state court, is relatively straightforward. The complaint is largely about enforcing an existing law: the New York State Human Rights Law, which banned source of income discrimination. HRI and Newman Ferrara say the defendants “have explicitly and systematically refused to rent apartments to tenants who intend to pay their rent with government-provided rental assistance.”
As a result, the suit asks the court to do a few things:
- Declare that the realtors and landlords named in the complaint have violated state law.
- Ban the defendants from engaging in source of income discrimination again.
- Require the defendants to comply with fair housing laws generally. The suit asks that defendants allow their processes to be monitored and for them to develop written procedures regarding fair housing policy “to be distributed to all staff, tenants, and rental applicants.”
- Award damages to HRI to fully compensate for the use of resources diverted to suing these defendants as well as attorneys’ fees, costs, and expenses.
“The real sword of Damocles hanging over their head is attorneys’ fees,” lead attorney Randolph McLaughlin, from Newman Ferrara, told Vox. “When you’re successful in a civil rights case like this, you get attorneys fees from the defendant. ... That can be significant.”
LISTEN: Defendant Keller Williams Realty on the phone with undercover tester
The Westchester case focuses on seemingly clear-cut rejections of potential Section 8 renters, but that’s not always the form alleged discrimination like this takes. Carr told me that ignoring would-be tenants after discovering their participation in the Section 8 program is common. Another tactic is steering the tenant to look in specific neighborhoods that are “quote-unquote more appropriate,” Carr explained, alluding to realtor decisions to keep low-income tenants out of “nicer” neighborhoods. There are also “unjustified income and credit requirements.” Carr told me these requirements are used to weed out voucher holders, as they often won’t meet high income requirements since they qualify for the voucher in the first place.
“We’re going after all types of discrimination. This is just the tip of the iceberg; this is just round one,” Carr said. “If we were only looking at explicit rejections, it would be a dereliction of duty.”
In an emailed statement, a Century 21 spokesperson said that the company “does not tolerate any form of discrimination and takes these allegations seriously. As you know this is a legal matter relating to our independently owned and operated franchise, New Golden Age Realty, and we cannot comment directly on the case. We will continue to monitor this situation as it develops.” The spokesperson declined to answer follow-up questions on the nature of the relationship between the franchise and the larger company.
LISTEN: Defendant Century 21 franchise on the phone with undercover tester
Keller Williams Realty did not respond to requests for comment as of publication time.
This lawsuit is actually the second filed by HRI alleging source of income discrimination. The first one landed in mid-March and focused on realtors and landlords in New York City. It differs from this case in one important way: It’s filed in federal court and therefore can make a claim not just under New York state law but also the federal Fair Housing Act.
This latter claim is that source of income discrimination, despite not being mentioned in the Fair Housing Act, violates the civil rights law because it has a disparate impact on a protected class. That standard ensures that plaintiffs don’t have to prove a policy was necessarily designed with the intent to discriminate; they can instead just show that it had a discriminatory effect against a protected class (such as race, familial status, and religion).
This claim isn’t being made in the New York state court case, but a victory under the Fair Housing Act could have national implications for source of income discrimination. It could open the door to litigation even in states without source of income protections on the books.
Why landlords and realtors discriminate against Section 8 recipients
Many fair housing experts believe that Section 8 discrimination is a proxy for other illegal discrimination — specifically, racial discrimination against Black Americans.
There has been widespread reporting on the use of Section 8 as a racial epithet. The Washington Post reported on how it became a “racially coded put-down,” citing the federal government’s disinvestment in public housing programs as white Americans began to make up a smaller share of the recipients.
Sara Pratt, the former deputy assistant secretary for fair housing enforcement and programs and senior adviser to the assistant secretary at the Department of Housing and Urban Development (HUD) during the Obama administration, told Vox, “I would say in many places the fact that someone is referring to someone as ‘Section 8,’ that is a code word for Black person. ... Courts have started recognizing that and saying if someone says ‘no Section 8,’ what they mean is racial discrimination.”
Racial discrimination is inextricable from source of income discrimination, but it’s very hard to isolate who is being discriminatory when there are real reasons landlords may not want to participate in the program. Martha Galvez, principal research associate in the Metropolitan Housing and Communities Policy Center at the Urban Institute, previously told Vox, “There’s a lot of reasons why landlords don’t want to accept vouchers. Some have to do with stereotypes about families that have vouchers and some parts of it have to do with landlords’ experiences with housing authorities and dealing with the government as a partner in your lease.”
There is evidence that some landlords have valid (nondiscriminatory) reasons for not wanting to participate in Section 8 housing — namely, working with the government to make sure your property fits the requirements can be onerous and frustrating. Landlords may have difficulty getting rents paid on time by the local public housing authority, and often the unit inspections can be an inefficient and arduous process.
After reviewing 1.5 million administrative records and interviewing 127 landlords and property managers in Maryland, Texas, and Ohio, researchers for HUD found that financial motivations, perception of tenants, and bureaucratic factors all played a role in some landlords’ reluctance to rent to a voucher recipient.
Philip Garboden, a professor and housing policy researcher at the University of Hawaii Manoa and one of the authors of the study, explained that the time premium that comes with accepting a housing voucher tenant versus one that is paying without that assistance is “a legitimate complaint.”
“If there’s a voucher, it can often take a month or more to get all of the paperwork done,” he said. “That can often mean, from a landlord’s perspective, they’re going to start a month later than a market tenant might. And that’s lost revenue because that’s a unit being held vacant even though there’s demand.”
Can you stop housing discrimination by making it illegal?
In 2018, the Urban Institute along with researchers at HUD published a study that asked the question: Do landlords “treat people with vouchers differently than other renters”? The answer was an unequivocal yes.
Similarly to the HRI lawsuit, the study employed testers to determine how landlords behaved.
Denial rates for voucher tenants ranged wildly in the cities they studied: Fort Worth, Texas (78 percent); Los Angeles (76 percent); Newark, New Jersey (31 percent); Philadelphia (67 percent); and Washington, DC (15 percent). Importantly, the researchers also discovered that landlords were the most likely to discriminate in wealthier areas, which has the effect of concentrating poverty and forcing voucher recipients to live in less desirable neighborhoods with worse outcomes for children.
Of the five cities they studied, Newark, Washington, and Philadelphia had source of income discrimination laws. Though it’s just one study, the data seems to indicate that the anti-discrimination laws are having an effect, since the three cities showed lower denial rates than in Fort Worth and Los Angeles.
LISTEN: Agent on the phone with undercover tester
Phil Tegeler, executive director of civil rights organization Poverty & Race Research Action Council, explained DC’s low levels of landlord discrimination, crediting civil rights actions like the one HRI is taking: “We saw the benefits of this approach in Washington, DC, where the Washington Lawyers Committee in collaboration with the Equal Rights Center had a multi-year enforcement effort on source of income discrimination. They had widely publicized prosecutions of landlords, broad testing of the rental market, and as a result DC had the lowest rates of source of income discrimination in the Urban Institute/HUD study.”
However, even in Washington, where the researchers found the least amount of discrimination, in 2018 the Equal Rights Center still found 130 advertisements that stated “no vouchers accepted” or “no Section 8,” suggesting that some landlords are still either unaware of the law or are confident that they can get away with breaking it.
Criminal justice research broadly shows that even associating high penalties with law-breaking isn’t sufficient to reduce crime — you need to raise the likelihood that landlords and realtors are being caught. HRI-type civil litigation is one avenue, but state attorneys general and HUD could also run investigations of their own. According to a 2012 ProPublica article, over its history HUD has largely refused to use undercover investigations.
“What we’re trying to do is make these brokers and these realtors and these landlords an example to the nation,” McLaughlin told Vox. “And if it works in New York, there are other states that have these same source of income discrimination laws. And guess what? We’ll be testing in those states when we’re ready and we’ll be suing in those states when we’re ready.” According to the National Multifamily Housing Council, 15 states and several localities including New York have source of income discrimination laws on the books.
A few of the defendants Vox spoke with, including Keller Williams’s Danielle DeMatteo and the owner of defendant EXIT Realty Group Sonny Vataj, claim that the properties they told tenants weren’t taking Section 8 are actually exempt from New York’s law. New York state law exempts owner-occupied single-family and two-family homes from its law barring source of income discrimination.
McLaughlin pushed back against these claims, telling Vox that they contacted every defendant to see if they could explain themselves before litigation proceeded: “A couple did come forward and we resolved those issues, but the ones we’re suing, they didn’t come forward to resolve any issues.” He added that they checked each property to try to determine whether it was owner-occupied before suing: “No one’s 100 percent sure, but none of the defendants have advised us of that.”
Still, these types of loopholes, as well as the general failure of small landlords to remain aware of and adhere to fair housing law, underscore the importance of making fundamental changes to how the housing voucher program works and the broader housing market writ large.
What policymakers can do outside of the courts
There are ways to redesign the Section 8 program to make it more attractive to landlords and do away with some of the logistical hurdles landlords say are causing them to be unwilling to participate:
- Increase funding for public housing authorities to do outreach to landlords and ensure there is enough staff to be able to respond quickly when there is outreach
- Ensure rents are competitive with the local submarket so that landlords aren’t being asked to take a pay cut in order to service housing voucher recipients
- Standardize inspections so that landlords and tenants can be confident that a unit won’t be disqualified for a minor infraction
But there also could be a broader reimagining of the voucher program. After a year when direct cash benefits have proved the value of these types of programs, the federal government should seriously consider making the voucher payable directly to the tenant. This would essentially eliminate source of income discrimination, since landlords would have no way of knowing that a tenant was benefiting from the program.
Additionally, concerns that this program would be abused without stringent oversight could be dealt with by designing the program in a way that provides ample communication between public housing authorities that administer the vouchers and the tenants themselves. As Vox’s Dylan Matthews reported in 2019, providing increased direct support to tenants through the housing authorities can also have the added benefit of ensuring they move to high-opportunity neighborhoods.
But perhaps most importantly, fixing the imbalance of power between low-income tenants and landlords will require addressing America’s dire lack of affordable housing. The Urban Institute/HUD study screened more than 341,000 online advertisements for rental units over the course of 16 months and found only 8,735 that “appeared to be voucher-eligible based on the information in the ad. On average we screened 39 advertisements to identify one potentially eligible unit.”
The power imbalance this type of lopsided market causes lays the groundwork for discrimination. If a landlord feels like there will be 30 people vying for every unit, they can afford to allow bias into their business practices because it won’t cost them much. On the other hand, if landlords are forced to compete for tenants, it gives tenants power to demand fairness and reasonable accommodations. This needs to come hand in hand with tenant protections, but without housing abundance, landlords will always have the upper hand.
“When real estate companies say no to Section 8 tenants, what they’re really saying is you can’t work here, you can’t get food here, and your child can’t go to school here,” Carr said. “Housing discrimination doesn’t just impact one thing — it impacts literally everything.”