How to Identify and Stop Housing Discrimination

Housing discrimination manifests in various ways, and proving it today can be challenging. However, organizations like HOPE Fair Housing conduct investigations to uncover cases of discrimination and work with the mission that everyone has the opportunity to live in the community or home of their choice, free from discrimination based on race, color, religion, national origin, sex, disability, familial status, or any other characteristic protected under federal, state, or local law. They achieve this through education, outreach, enforcement, training, and advocacy.

Michael Chavarría, executive director of HOPE Fair Housing, shared that the biggest barrier immigrants face in any housing transaction, whether buying or renting, is the lack of credit history. There is a heavy reliance on credit scores and reports to document a person’s ability to pay. “The credit scoring system is discriminatory and not really good at predicting someone’s ability to make their housing payments,” Chavarría indicated. In the absence of a credit report or a credit score, it’s harder to qualify for housing than it should be, he explained.

Chavarría said that discrimination can occur when granting loans. For example, “Individuals have been steered toward FHA loans even when they qualify for conventional loans with better interest rates. An FHA loan might give you a lower interest rate, but you’re stuck paying private mortgage insurance (PMI) forever. We’ve definitely seen instances of people being directed to FHA loans based on their race or perceived credit profile, without being offered conventional loan options,” Chavarría commented.

Loans backed by the Federal Housing Administration (FHA) allow banks and credit institutions to reduce their risk and offer loans to people with lower incomes than those required for conventional loans. FHA charges mortgage insurance (PMI) to its loan beneficiaries, which increases their monthly payments.

Another example of discrimination is when people interested in a loan leave a message requesting more information and are never contacted, sometimes because lenders or banks reject them based on their race or national origin. The executive director of HOPE added that “one of the biggest problems we see with banks is their failure to market and engage with non-white or lower-income communities.” It’s important to recognize that some banks are doing a better job than others, ensuring they have bilingual loan officers or making sure their loan products cater to people from different backgrounds.

Another type of discrimination that can occur during the homebuying process is known as “steering.” It’s an unethical practice where real estate agents guide potential buyers toward or away from certain neighborhoods based on their race or ethnicity. An example is “showing Latino buyers homes only in Latino communities, even though the client indicated the things they want in a home,” explained Chavarría.

Incorrectly appraising a property is also considered discrimination. HOPE is focusing on this area, advocating for fair home appraisals. What they’ve found is that “the appraisal industry is ripe with prejudice,” Chavarría commented. That is, companies tend to invest more time when they believe the property owner is white, being more careful and offering a more positive adjustment that increases the property’s value. The opposite happens when appraising properties of Latino or African American owners, leading to a devaluation that affects the person’s wealth and that of future generations.

Discrimination Based on Family Size and Restrictive Ordinances

Agencies that address housing discrimination cases have observed that Latinos are sometimes discriminated against because of the size of their families, especially families with children, limiting the number of people who can live in a home. While HOPE has not reported cases of this kind, they are aware of their existence.

HOPE indicates concern about local ordinances that attempt to restrict the number of vehicles a household can have, which affects large, particularly intergenerational, families.

HOPE has heard “complaints about issues with refusing to allow work trucks to park outside homes. If we’re talking about immigrants in general, they tend to be entrepreneurs, owning small businesses, construction, for example. These are well veiled ways to target certain groups of people,” shared Chavarría.

HOPE has addressed complaints reporting discrimination and has succeeded in changing policies. Through investigations into discrimination, they have been able to change entire systems. “What we tell people is [to react to] that feeling in your stomach. You walk away out of a conversation or experience, and you just know something wasn’t right. You just know you weren’t being treated fairly. That’s the person who should call us,” Chavarría explained.

Through various channels, HOPE handles discrimination complaints. Many clients prefer to protect their identity because they don’t want to take the risk, but they still file the complaint because they don’t want other families to experience the same issues. HOPE acknowledges that discrimination has human and financial costs, a real cost that they can try to recover through the legal process.

Cases of discrimination against individuals without legal status are a significant concern for HOPE, and it is possible to support the affected individuals in seeking justice and ensuring they are treated as the law requires. Immigration status is not a barrier to accessing HOPE’s services. To file a discrimination complaint with HOPE related to housing or housing-related issues, immigration status does not matter.

In Illinois, “this year the Illinois Human Rights Act was amended to include immigration status as a protected class, so immigration status is protected in Illinois, which means you cannot be treated differently based on your immigration status,” Chavarría explained.

Alert on Scams in Private Financing Property Sales

HOPE’s executive director emphasized that one of their organization’s biggest concerns right now is private financing sales. “It’s very similar to rent-to-own: someone signs a contract, saying, ‘I’m going to buy this house from you and it’s always going to be dirt cheap’. But the seller finances it and is going to charge me, I don’t know, 15% to 17% interest. You are going to be responsible for all repairs, but you are not the owner until you make your final payment,” Chavarría described. Private contracts, where the property owner offers financing for the purchase of the house, can be abusive, a scam.

It’s crucial that people understand that these contracts are designed to benefit the property owner. Chavarría warns that what buyers “don’t know is that they don’t own the property, they don’t have the traditional homeowner rights like a mortgage borrower would have. It’s the seller’s property until that final payment, and during that time you really have no rights, if you miss a payment, they can just take it back.”

Regarding these scam cases, HOPE has identified situations where people buy homes in terrible condition, homes for tax sales, foreclosed homes, or homes that need complete remodeling. These properties are being marketed to people who regularly have trouble finding housing, such as those with credit problems, eviction history, or criminal records. These individuals are often the target of these contracts.

HOPE continues to work against these housing purchase scams, which are being reported nationwide, including in Illinois. Scammers are taking advantage of vulnerable people, who fall victim to the promise of homeownership at an exorbitant price. To learn more about your housing rights, HOPE offers training sessions in Spanish, open to the public, where they talk about fair housing, educate people on how to identify discrimination during the home-buying process, and also as homeowners. Everyone involved in the home-buying process has the right to a fair and free evaluation.

Contact with HOPE Fair Housing Center

hopefair.org

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The production and publication of this story by La Raza have been made possible in part thanks to a grant from The Chicago Community Trust through its Cross Community Impact grant program.