Real estate firm charged with racial discrimination
Federal lawsuit alleges Fair Housing Act violations
By Glenn Roberts Jr., Thursday, July 31, 2008.Bookmarking Sites
The U.S. Department of Justice has filed a lawsuit on behalf of a fair-housing organization, charging a RE/MAX brokerage and an affiliated agent in northern Illinois with housing discrimination.
The lawsuit, filed July 18 in U.S. District Court in the Northern District of Illinois, charges that testing conducted by the National Fair Housing Alliance revealed discrimination based on race and national origin.
Officials at RE/MAX East-West, which is based in Elmhurst, Ill., did not respond to Inman News requests for comment.
The National Fair Housing Alliance conducted an investigation of the sales practices of RE/MAX East-West from June 2004 through February 2005 using undercover "testers" who posed as home buyers. The testers were of different races and origins. The results of this investigation led to an NFHA complaint, U.S. Department of Housing and Urban Development investigation and the federal lawsuit.
The organization has also conducted similar tests at several other brokerage companies (see Inman News article).
John Wassinger, who bought the RE/MAX East-West business in 2006, this week told a local newspaper, the Daily Herald, "If there is anything that is a mantra in this industry, it is that everyone is to be treated fairly and blindly." Racial steering "isn't tolerated," he said.
John DeJohn, the agent who is charged in the Justice Department lawsuit, left RE/MAX East-West and now works for another real estate company in northern Illinois, according to the lawsuit.
DeJohn in September 2004 reportedly steered a Hispanic tester, acting as a home buyer, toward areas that are predominantly African-American and Hispanic, the lawsuit alleges, and told the tester that one of the homes "'might be good for you,' or words to that effect,' " the lawsuit states.
DeJohn allegedly did not show or offer to show the tester any additional homes, and told the tester that she could not afford homes in several predominantly white areas, "even though in some cases the median home value in those areas was within the tester's price range," according to the lawsuit. Also, the lawsuit charges that DeJohn did not make any follow-up phone calls to that tester.
Later that month, a white tester made an appointment to view homes with DeJohn, who allegedly encouraged the tester to "research online to find out 'what the minority population is' of neighborhoods in the Chicago region, or words to that effect."
DeJohn allegedly steered the white tester toward predominantly white areas and away from predominantly African-American and Hispanic areas, the lawsuit states, and showed the white tester nine homes -- seven in predominantly white areas.
He allegedly told the white tester, "'I don't care if you are a bigot. If we go to an area and you don't like it, just let me know. I can't be a bigot but you can be one,' or words to that effect."
And while DeJohn allegedly told the Hispanic tester that one home "might be good for you," he allegedly referred to that home and another home as "dumps" and "repos" when speaking to the white tester. And the lawsuit charges that DeJohn made multiple follow-up calls to the white tester.
NFHA filed a complaint with HUD on Aug. 22, 2005, and amended the complaint on April 7, 2008. HUD officials "determined that reasonable cause exists to believe that illegal discriminatory housing practices had occurred," the lawsuit states, and on June 9 the housing agency issued a charge of discrimination in violation of the Fair Housing Act and later authorized a civil action.
The lawsuit seeks to enjoin the company and its agents and employees from engaging in discrimination on the basis of race and national origin related to home sales, and also seeks monetary damages to NFHA.
Shanna L. Smith, president and CEO of the National Fair Housing Alliance, which is based in Chicago, said in a statement, "We are pleased with HUD's decision to issue a charge ... and we hope that this will send a clear message to the housing industry that real estate agents and companies must be held accountable to the law."
NFHA reported this week that its 12-city investigation turned up an 87 percent rate of alleged racial steering and an almost 20 percent rate of alleged housing denial for African-Americans and Latinos.
Inman News has reported on several other complaints filed by NFHA against real estate companies in metro Atlanta; Detroit; Chicago; Fairhope, Ala.; Westchester, N.Y.; and Long Island. Among the companies named: Coldwell Banker The Condo Store, Coldwell Banker Marietta, RE/MAX Buckhead, Coldwell Banker Joe T. Lane Jonesboro, Detroit Century 21 Town & Country, Coldwell Banker Gold Coast, RE/MAX East-West, Manders & Company Real Estate, Peter J. Riolo Real Estate and Julia Stevens Realty.
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Submitted by Peter J. Pike on July 31, 2008 - 2:35pm.
Having defended a client (and friend) in a similar lawsuit, I can only say that "testing companies" like the NFHA are in business to find housing discrimination, whether it exists or not. They bullied my client, trying to get him to "settle" their claim, and when he refused, they sued. They also put out press releases making it look like they were guilty, before any of the true facts came out.
At the end of the trial (it took almost a year to get to trial), a jury found my client not guilty. However, because of the stress and financial pressures put on him by the allegations (he lost a lot of customers because of the negative publicity), his wife left him and he lost his business. There was no retraction from the testing company, no apology. Rather, they went to the papers and made it sound like the jury just did not understand the case! What they failed to understand was that my client was not a racist and that he did not engage in steering.
During settlement negotiations, the attorney for the testing company (who also was on the board of directors, and had set up the company - conflict of interest?) told me point blank that the realtors can never win, because no matter what they do, they will be guilty of discrimination!
Please don't get the idea that I am in favor of steering or other forms of discrimination in housing. I am just against a business that makes its money off of legally blackmailing innocent people.
Submitted by Eric Bouler on July 31, 2008 - 4:23pm.
Eric Bouler
Prudential Gardner
New Orleans,La.
www.neworleanscondotrends.com
You are so right, this could happen to anyone of us. I have been tested and there were no issues. I was put out as they cancelled the appointment as I was waiting for them. Our time is our money.
Personally I am scared to show homes in certain areas of New Orleans. Would I be wrong in wanting to stay safe?
Submitted by Jean Powers on July 31, 2008 - 4:30pm.
I think that any real estate sales person who discriminates or is unethical, whether they are an agent or a Realtor, gives the rest of us in this profession a very bad name! I would hope on the other hand after reading the first comment, that the NFHA isn't going after innocent agents. They should make sure that they are going after an agent who has truly discriminated against someone! I pride myself on being a very ethical and professional Broker/Realtor. I wish all of us could be honest and ethical!
Submitted by carrie gingrich on July 31, 2008 - 11:50pm.
The testers may be over-zealous -- but there still exists massive covert and blatant discrimination on all levels of the housing industry. Indirect or misdirected displays of discrimination is no excuse. Double-talk, use of fuzzy or grey language and terminology to promote acts of discrimination by broker, agent, customer or client, is completely out of order. Will we ever learn?
Submitted by Marty Botnick on August 1, 2008 - 9:53am.
I have been "tested" three times in my career. Each couple (always a couple) probably could not believe that I could treat them honestly and fairly. What really got to them was my persistant follow-ups: calls, leaving packets of listing for them, to which a response or acknowlegment never came. In each case they posed as "professionals" (which they probably were) so that I was showing pricey properties in our pricey neighborhoods. Well, after weeks of this the "Buyers" disappeared never to be heard from again and no complaints were ever filed. Why can't we be left alone to ply our trade? In grabbing one rotten apple that does not belong in our business, each one of us gets to be tarred with that same brush. But I guess that is just life in today's world.
Submitted by Jim Lee, Knoxville TN Realtor on August 1, 2008 - 12:51pm.
The way I understand how the National Fair Housing Alliance (NFHA) works is this:
First, HUD funds their testers to test real estate professionals for discriminatory tactics of any sort.
Once a vict....er, 'suspect' is identified the NFHA sits down with the hapless broker, lays out their evidence against them and attempt to negotiate a settlement which the NFHA gets to keep if successful.
If someone has the cojones to stand up to them, as Mr. Pike's client above evidently did, NFHA's next tactic is to sic HUD and the DOJ's lawyers on you and file federal litigation with NFHA as the plantiff.
If successful NFHA gets to keep any monetary damages that result in effect giving them two opportunities to get a bite of the apple which is your pocketbook.
Realty Times wrote an article I remember from a couple of years ago detailing the same scam against another real estate firm.
http://realtytimes.com/rtpages/20060825_nrtblackmailed.htm
Submitted by Commercial Mortgage Loans - Privately Funded - MasterPlan Capital LLC on August 1, 2008 - 3:55pm.
Just please keep in mind that this story tells only one side of the story. There are, of course, two sides. One you may never hear.
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