Are landlords getting ripped off by tenant screening reports?
A couple of years ago, a summer intern at The Real Deal nearly had her career derailed by an erroneous background check. A screening company had included someone else’s information in her profile. After many weeks, she got it fixed.
But she didn’t stop there. She wrote an award-winning investigative story about tenant background checks, which she found were frequently riddled with errors. Perfectly qualified applicants were getting rejected for apartments.
This problem, which continues unabated, is almost always portrayed as a tenant issue — and it is. But it’s also a landlord issue. Building owners are paying good money for bad information.
Now, the government is doing something about it. Or trying to.
Last week, the Consumer Financial Protection Bureau told consumer reporting companies to stop selling inaccurate background checks and to clean up their sloppy credit file sharing practices.
“Background check and other consumer reporting companies do not get to create flawed reputational dossiers that are then hidden from consumer view,” said CFPB director Rohit Chopra in a statement. “Background check reports, and all other consumer reports, must be accurate, up to date, and available to the people that the reports are about.”
The warning was only advisory. The board’s powers are limited, to the dismay of its creator, Sen. Elizabeth Warren. But on occasion it bears its tiny teeth.
In October it ordered TransUnion to pay $8 million for lying to consumers, and teamed up with the Federal Trade Commission to request that a federal court order TransUnion to pay $15 million for failing to ensure its tenant background checks were accurate and for not telling renters who was providing the firm bad information.
These companies would be a lot more responsive if their customers in the real estate industry complained. But this is not a high priority for landlords. If a screening report raises red flags, the easiest response is to just rent the apartment to someone else. And some might want to see an arrest from more than seven years ago that didn’t result in a conviction, even if that is supposed to be excluded from reports.
What we’re thinking about: Real estate agents are telling home shoppers not to wait for mortgage rates or housing prices to fall, because they will face more competition during the spring selling season. Have you ever heard an agent say it’s not a good time to buy? Send a note to eengquist@therealdeal.com.
A thing we’ve learned: One of every four New York City homes is a co-op. The city’s 310,422 co-op units make up roughly half of all co-ops in the U.S., according to PropertyShark. Co-ops date back to the late 1800s, but surged after World War I and boomed from the end of World War II until the 1970s. They have since lost some of their cachet with buyers.
Elsewhere in New York…
— Landlords’ arguments to stop Kingston from enacting rent stabilization will be heard Friday morning by the Appellate Division. Magda Cruz, a partner at Belkin Burden Goldman and former Rent Guidelines Board member, is representing the landlords. The Hudson Valley Property Owners Association sued in October 2022, claiming the Kingston City Council used flawed data to calculate a vacancy rate below 5 percent, allowing for rent stabilization under the landmark state law passed in 2019. A lower court rejected their claim, but agreed that Kingston couldn’t reduce rents retroactively. Both sides appealed.
— In what may prove to be a rookie mistake, the campaign of first-time congressional candidate Mazi Pilip called former Rep. Tom Suozzi “the godfather of the border crisis,” Newsday reported. Suozzi, who is Italian-American, immediately made the story about ethnic stereotyping. “Why would you call me the godfather?” he said. “Why would you use that particular expression?
— The Department of Buildings has fined more than 400 Lower Manhattan, Midtown and Upper West Side parking garage owners $1,000 apiece for missing the Jan. 1 deadline to file engineering inspection reports for their properties. The compliance rate for the 1,056 parking structures subject to the deadline was 62 percent, the agency said. The inspection requirement, which has later deadlines for other parts of the city, began two years ago — well before an April 2023 collapse that killed a garage employee and injured several others. The fine repeats monthly, with a separate $5,000 penalty at year-end.
Closing Time
Residential: The priciest residential closing Thursday was $6.5 million for a condo at 360 Furman Street, Brooklyn.
Commercial: The most expensive commercial closing of the day was $10 million for a 13-unit building at 2067 Broadway in the Lincoln Square neighborhood of Manhattan.
New to the Market: The priciest residence to hit the market Thursday was a condo at 49 Chambers Street in Tribeca asking $19.5 million. Douglas Elliman has the listing.
Breaking Ground: The largest new building filing of the day was for a 59,000-square-foot building for vehicle storage and repair at 151 Morgan Avenue, Brooklyn. Halsey McCormack & Helmer filed the permit application.
— Jay Young