Compass, deep in an existential crisis, got a visit Tuesday from the ghost of blunders past.
The brokerage reached an agreement with New York Attorney General Letitia James over allegations of voucher discrimination it already paid for once, six months ago.
In April, the brokerage settled a suit brought by the watchdog group Housing Rights Initiative alleging Compass discriminated against tenants trying to rent with housing vouchers. To make amends, the firm agreed to bigger commissions for agents who broker Section 8 leases.
Tuesday, the brokerage was served a second helping of humble pie by the attorney general. But it was a very small slice — indeed, more like a crumb: Compass agreed to waive broker’s fees for the first 25 applicants who sign leases using Section 8 vouchers.
Compass also consented to educating agents about laws protecting voucher users and to pay its brokers 90 percent of the commission when a tenant using Section 8 gets an apartment. Typically, agents receive 80 percent of the commission, according to the proptech firm Homelight.
A Compass spokesperson said the firm was pleased the deal with the attorney general would allow it to “put this matter behind us.”
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Housing Rights probe accuses brokerages, landlords of Section 8 discrimination
James’ investigation highlighted that the brokerage’s agents pointed the finger at landlords when they were questioned as to why an apartment did not accept vouchers.
Some Compass agents allegedly told tenants that property owners in Hell’s Kitchen and the Upper East Side would not accept applicants intending to use Section 8 vouchers. “No Section 8” is a phrase that New York tenants and brokers have heard for several decades.
Landlord trade groups favor vouchers because they expand a tenant’s affordability threshold and are a reliable rent supplement. But some owners balk at the red tape that can delay a voucher-bearing tenant’s moving in for months, costing landlords thousands of dollars.
As a result, test callers employed by Housing Rights Initiative have found Compass to be just one of “many, many, many larger brokers that … discriminate against tenants using vouchers,” the group’s executive director Aaron Carr said by email.
HRI initially sued 88 landlords and residential brokerages over the practice in March 2021. A separate complaint lodged in May 2022 alleged 124 real estate firms, brokers, and landlords had engaged in discrimination.