NYC Housing Marketer Sued Over Refusals For Criminal Pasts

A company screening applications under New York City’s 421a affordable housing program enforces a blanket ban on all prospective tenants with criminal backgrounds, disproportionately harming Black and Latino renters, a nonprofit told a federal court.

The Fortune Society Inc., which helps formerly incarcerated individuals reenter society, filed suit on Friday against iAfford NY LLC, accusing the company of discriminatory practices that it says came to light after iAfford rejected a Fortune Society client’s housing application solely because of a past criminal conviction.

Further investigation revealed that iAfford, which handles applications for more than 100 buildings under the affordable housing tax break program known as 421a, refuses to rent to formerly incarcerated individuals regardless of why they were convicted and how long they’ve been out of prison, according to the complaint. This approach singularly harms Black and Latino renters, who are incarcerated at disproportionate rates compared to their white counterparts, Fortune Society added.

“As is generally the case with blanket bans, due to the wide and persistent racial disparities [in incarceration rates], iAfford’s blanket ban has a clear disparate impact on the basis of race, color and national origin,” the nonprofit said. “As a result, iAfford’s blanket ban operates to disqualify otherwise-qualified Black and Latino individuals from living in its marketed properties at disproportionate rates.”

IAfford helps developers reach and select tenants in 421a, or the Affordable New York Housing program, which provides private developers tax breaks for designating at least 25% of a development’s units as affordable, according to the complaint. The company screens applications for thousands of housing units across more than 40 neighborhoods, the suit says.

A Fortune Society client’s application for 421a affordable housing was rejected by iAfford in 2021 after a pre-screening background check turned up a prior criminal conviction, the organization said Friday. When an employee of the nonprofit followed up, an iAfford manager confirmed that “usually people with criminal backgrounds are rejected, like overall,” the complaint alleged.

The group said it then turned to Fair Housing Justice Center testers, who were told by iAfford employees in recorded calls two additional times that the company will reject any applicant with a criminal background. The company told callers that this policy was mandated by the New York City Department of Housing Preservation and Development, or HPD, the suit alleges.

But, as Fortune Society noted, iAfford’s policy runs contrary to the approach recommended by the U.S. Department of Housing and Urban Development and mandated by HPD. According to the complaint, the agencies require landlords to weigh the nature of an applicant’s conviction, age at the time of conduct, evidence of rehabilitation and other such factors, rather than relying on convictions to reject renters outright.

“HPD has issued detailed guidelines requiring that HPD-approved marketing agents engage in a substantive, multistep individualized inquiry of justice-involved individuals,” the housing group argued. “Pursuant to these HPD guidelines, housing providers may only consider convictions for a limited list of offenses that involve physical violence or adversely affect the health, safety and welfare of other people.”

Without an individualized approach, iAfford’s policy further entrenches the racial disparities of the criminal justice system, Fortune Society said. Black applicants are eight times more likely than their white counterparts to be excluded from iAfford-marketed properties, and Latino applicants are 2.5 times more likely, according to the complaint.

Fortune Society argued that iAfford’s blanket ban and its disparate ramifications depending on applicants’ race are violations of the Fair Housing Act, the New York state Human Rights Act and New York City’s Human Rights Act.

Eugene Goldstein, iAfford founder and chief operating officer, told Law360 in a Monday statement that the company stringently follows the Fair Housing Act and HPD rules, adding that it plans to launch an in-house investigation.

“We are confident that any look into our company operations will quickly prove our adherence to all fair housing laws,” Goldstein said. “Our entire raison d’être is to facilitate affordable housing for those who need it most, our objective is to help them, to ensure that they have every possible chance.”

A bill was introduced in New York City Council in August that would bar landlords and real estate brokers outright from requesting criminal background checks from prospective tenants, but there has been little movement on it since.

Fortune Society is represented by Valerie D. Comenencia Ortiz, John Relman, Lila Miller and Margaret Moran of Relman Colfax PLLC.

Counsel information for iAfford was not immediately available.

The case is The Fortune Society Inc. v. iAfford NY LLC, case number 1:22-cv-06584, in the U.S. District Court for the Eastern District of New York.