A neighborhood of houses in Elmont in an aerial photo...

A neighborhood of houses in Elmont in an aerial photo on July 1, 2019. Credit: Newsday/John Keating

ALBANY — Spurred by a Newsday investigation, the State Senate will release a report Wednesday calling for stiffer penalties for housing discrimination, more training for real estate agents and an initiative to deploy undercover homebuyers to test whether agents are "steering" customers toward or away from certain neighborhoods.

The Democratic-led Senate said an overhaul of real estate practices is needed following hearings it conducted that were sparked by "Long Island Divided," a Newsday investigation that found evidence of widespread separate and unequal treatment of minority potential homebuyers and minority communities on Long Island.

Following its own subsequent investigation, the Senate plans to approve a slew of real estate and housing bills in the next month and work with the state Assembly to change state housing laws.

An overhaul is needed because the hearings demonstrated many real estate agents didn’t understand the gravity of the discrimination that was exposed, lawmakers said.

"The overriding theme that came out of the hearings, that we tried to layer on top of the Newsday expose, was that no one was really contrite about what happened," State Sen. James Skoufis (D-Cornwall), chairman of the Senate Investigations Committee, said. "The (Realtors’) association did acknowledge the problem. But the actual bad actors, almost to a person, offered no apology, no acknowledgment they did anything wrong. That told us as legislators we do really need to step in and take some serious actions here."

"One thing was obvious from the hearings: There was a fundamental misunderstanding, by the agents and brokers, about what housing discrimination is," said State Sen. Kevin Thomas (D-Levittown), chairman of the Consumer Protection Committee. "That surprised me. Even when they were caught on camera doing something considered illegal, they just didn’t understand it was wrong."

In a three-year investigation published in 2019, Newsday sent testers carrying hidden cameras and microphones to meet more than 80 real estate agents and record 240 hours of interactions. The matching tests were in areas that went from the New York City line to the Hamptons and from Long Island Sound to the South Shore. Thirty-nine of the tests paired Black and white testers, 31 matched Hispanic and white testers and 16 involved Asian and white testers.

recommended readingLI Divided: Read the investigation and watch the documentary

The findings included evidence that some agents directed minority potential homebuyers toward homes in neighborhoods with comparatively higher concentrations of minority residents and that agents sometimes required preapproved mortgages from Black or Hispanic customers but not white ones.

In 40% of the tests, evidence suggested brokers subjected minorities to disparate treatment when compared with white testers. Black testers experienced disparate treatment 49% of the time; Hispanics 39%, and Asians 19%.

When the Senate opened hearings in 2019, Moses Seuram, president of the New York State Association of Realtors, told lawmakers the group was "appalled" by what Newsday had found.

"If there is one message we want to convey to you today, it is this: We are appalled by the action reported by Newsday involving real estate licensees, and NYSAR wants to work with New York state to be part of the solution moving forward," Seuram said.

He said the association immediately suspended its training programs because they were ineffective and would be revamped.

The Newsday report sparked investigations by Gov. Andrew M. Cuomo, Attorney General Letitia James and the Senate.

The Senate began public hearings in December 2019 and, after only one of 68 agents and executives showed up at the initial proceeding, issued dozens of subpoenas to compel testimony.

Skoufis said a pattern emerged in the agents’ testimony: They believed they didn’t violate anti-discrimination laws if they didn’t knowingly intend to. But that’s not how the law works, the Democrat pointed out.

"Discrimination is discrimination whether it’s intentional or not, whether it’s explicit or implicit," Skoufis said. "If you were denying equal services to people based on what they look like, that is against the law."

The Senate report concludes, in part: "New York State laws and regulations allow for too much self-monitoring of anti-discriminatory behavior as the major enforcement mechanism to ensure equal and fair housing opportunities." Among the Senate recommendations:

  • Direct the attorney general’s office to oversee undercover testing to see if agents are complying with anti-discrimination laws.
  • Hike the semiannual brokers’ fee by $30 and semiannual agents’ fee by $10 to generate an estimated $2.2 million to pay for testing initiative.
  • Require an additional two hours of training of new agents on fair-housing laws (increasing it from four to six), including a focus on implicit bias. Require realty office managers to take fair-housing training, the same as brokers, to ensure supervisors are aware of the laws.
  • Double the maximum fine (to $2,000) for fair-housing violations and allow someone to pursue punitive or compensatory damages through state Division of Human Rights proceedings.
  • Standardize agents’ operating procedures, such as determining whether preapproved mortgages are always — or never — needed, rather than leaving it as a case-by-case basis.
  • Encourage the industry to open more offices in minority communities and hire more minority agents.
  • Mandate agents collect and report demographic data of applicants, matching a federal requirement on mortgages.
  • Discontinue the video recording of fair-housing training courses. Recording hindered open dialogue about agents’ understanding of and complying with anti-discrimination laws, the Senate report said.

"There’s no disputing the fact that we have a problem on Long Island when it comes to the unequal treatment of minority homebuyers, and we also know that it’s not a victimless offense," said State Sen. Anna Kaplan (D-North Hempstead), who sponsors the bills to focus on training regarding implicit bias and hike agents’ fees to fund testing programs.

"Fixing this problem going forward, and ensuring everyone is treated fairly, is going to rely on better education and training for real estate professionals, and stronger enforcement mechanisms to deter bad actors from engaging in harmful, illegal practices," Kaplan added.

Thomas said increased training and stiffer penalties should not overly burden agents and brokers.

"The real estate industry will always make money," Thomas said. "We’re just telling them to do it in a more ethical way because of what we found here. In no way are they going to lose money by being ethical."

Among the key recommendations in a State Senate report on an real estate practices:

  • Perform undercover testing to see if agents are complying with anti-discrimination laws.
  • Increase the semiannual brokers’ fee by $30 and semiannual agents’ fee by $10 to generate an estimated $2.2 million to pay for the testing initiative.
  • Require two additional hours of training for new agents on fair-housing laws, including a focus on implicit bias.
  • Double the maximum fine to $2,000 for fair-housing violations and allow someone to pursue punitive or compensatory damages through state Division of Human Rights proceedings.

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