[NYtenants-online] Rent Control issues; Tenant Blacklisting

[Tenant]

NYtenants Online/TenantNet                               12/11/03
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IN THIS ISSUE ...

1. Did DHCR throw your Fair Market Appeal out the Window?
2. Rent Control Alert: MBR could go up 17.2%
3. Seeking tenants who have been Blackisted
4. When the Credit Check Is Only the Start (Times)

Every so often, tenant attorneys seek out tenants who have been affected by 
certain DHCR/Court decisions or by abusive practices of landlords or of 
other companies.

In this newsletter, two tenant attorneys are seeking tenants. Robert Katz 
is looking at DHCR abuses in determinations of Fair Market Rent Appeals. 
Jamie Fishman is looking for tenants who have been victims of screening 
bureaus used to blacklist tenants. Depending on the response, they may 
request those responding to become plaintiffs and they may possibly engage 
in litigation. Tenant input is important to framing potential legal action.

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DID DHCR THROW YOUR FAIR MARKET APPEAL OUT THE WINDOW?

To tenants or tenant attorneys/representatives who:

1. Filed a Fair Market Rent Appeal (FMRA) with the Division of Housing and 
Community Renewal (DHCR) at any time on or before December 31, 1994, AND

2. Who lost that FMRA because of the change in DHCR policy regarding 
"comparable apartments" that was implemented by DHCR in 1998.

If you are a tenant in such a situation (or if you are a tenant association 
representative or tenant attorney with a such a tenant or client), please 
contact tenant attorney Robert Katz at 212-587-2400 ext. 13 and leave a 
message. Someone will contact you.

A FMRA is a complaint that the first rent stabilized tenant may file with 
DHCR after a rent controlled tenancy has terminated. First rent stabilized 
tenants may file a FMRA complaint within 90 days after being served with a 
copy of first rent stabilized registration.

A FMRA differs from an overcharge complaint as calculations of legal rents 
are not based on rent stabilization vacancy and renewal leases, but rather 
by a combination of a formula set by the Rent Guidelines Board and a 
comparison of rents in similar apartments in the building. In 1998, DHCR 
changed its policy regarding comparable apartments and this change resulted 
in a greater number of FMRA complaints being denied or in only minimal awards.

On January 1, 2002, DHCR established a new form (in the nature of a summary 
notice) that deprives tenants of a fair opportunity to verify information 
that the landlord submits to DHCR ex parte regarding comparable apartments.

But the comparable apartments that are submitted for consideration by the 
landlord might have had illegal or improper improvements and therefore 
improper rent increases. So the tenant's FMRA decision might be based on 
comparable rents that are themselves illegal.

Such rents ought to be scrutinized, but DHCR denies all attempts to obtain 
necessary information through the Freedom of Information Law (FOIL) on the 
grounds that the tenants in the comparable apartments have a right to 
privacy as to the disclosure of their rents. While the FOIL law does 
contemplate issues of privacy, many feel DHCR is overreaching in such 
instances. After all, the information is not in the nature of a personal 
illness or employment history which are (and should be) subject to the 
privacy exclusions from FOIL. For years tenant advocates have understood 
DHCR's concern of privacy is a way to avoid protecting tenants' rights.

And in addition, DHCR utilizes the four year rule for comparable units as 
well. Tenants therefore cannot challenge or scrutinize the historical rents 
being used as factors in determining the FMRA. Even if the tenant filed a 
FMRA in a timely fashion, they are not being allowed to investigate, 
scrutinize and challenge rents beyond four years, even if such rents are 
illegal.

When it comes to helping the landlords, DHCR is bending over backwards. In 
the pre-Pataki era, comparables were part of the equation, but only if 
landlords actually submitted the comparable information. Now DHCR goes out 
of the way to search its own records. And while comparables should be 
restricted to similar units within the same building, DHCR is apparently 
allowing owners to submit alleged comparables from units outside the 
immediate building.


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RENT CONTROL ALERT

DHCR is proposing the highest Maximum Base Rent (MBR) factor since 1976 -- 
17.2% for the 2004/2005 MBR cycle. This means that rent controlled tenants 
whose Maximum Collectible Rent (MCR) has reached the Maximum Base Rent 
(almost all of the apartments in the system) will pay a whopping 7.5% 
increase each of the upcoming two years. Rent Control tenants should be 
screaming about this unwarranted rent increase. Call your city and state 
legislators. The City Council -- thanks to the change in the rent laws 
passed in Albany in June of this year, is unable to do anything about the 
proposed MBR increase.

The sharp increase in the MBR is primarily caused by the property tax 
increase of 18.5% put in place by Mayor Bloomberg and Speaker Gif Miller. 
While they may have been in a bind given the city's budget woes, Bloomberg 
is planning to spend over $5 billion dollars on stadium and subway 
boondoggles on Manhattan's West Side and yesterday announced a $2.5 billion 
folly for a basketball arena in Brooklyn (which would also evict over 100 
tenants).

The DHCR will hold a hearing on the proposed factor:

Tuesday, January 6th, 2004
Dept. Of City Planning
22 Reade Street (Spector Hall)
Manhattan

To register to speak, call the office of Michael Berrios 718-262-4717. DHCR 
so far has refused to put their own report on its website. You can ask DHCR 
for a copy of the research report or you can get it at:

http://www.tenant.net/alerts/MBR/MBR%202004-05%20public%20hearing%20notice.pdf


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BLACKLISTED TENANTS NEEDED

Tenant attorney Jamie Fishman is seeking tenants who have been blacklisted 
simply because they have been sued by their landlords in housing court. 
Tenant Screening Bureaus often report erroneous data to landlords seeking 
information of potential tenants.

As many tenants know, many Housing Court cases are completely unfounded. 
Tenants often have legitimate and serious reasons for withholding rent, 
including lack of services, heat, hot water, etc. In many cases landlords 
sue for illegal rents. But the simple fact that a tenant's name appears in 
a housing court database could impair their ability to find their next 
apartment, whether or not the housing issue was justified or whether or not 
they won their case. Such a listing also acts to intimidate tenants from 
exercising their rights. We often hear of tenants who will not exercise 
their rights for fear of being listed.

Mr. Fishman is considering legal action regarding the abuses of tenant 
blacklisting. He is seeking tenants who have been victimized. Specifically, 
he is looking for people who have applied to rent an apartment and have 
been turned down, at least in part, because a report from the First 
American Registry that included a prior Housing Court Case, described only 
as "Case Filed."  If the case has been resolved, either by settlement, 
dismissal, discontinuance or whatever, it violates the Fair Credit 
Reporting Act by not including the disposition. At this time he is only 
looking for people who have been denied an apartment because of a registry 
report.

You may contact Jamie Fishman at:

Fishman & Neil, LLP
305 Broadway
New York, NY
212-897-5840
JamesR626@aol.com

See article below that deals with tenant blacklisting.


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WHEN THE CREDIT CHECK IS ONLY THE START
New York Times, October 12, 2003
by Dennis Hevesi

In the old days, way back when faxing seemed innovative, selecting the 
right tenant for a vacant apartment usually required a building owner or 
manager to phone the previous landlord, talk with the applicant's employer, 
scan letters of recommendation, closely study the standard credit report 
and, sometimes, simply sit across the table and look the prospect in the eye.

These days, when far more than a would-be tenant's creditworthiness and job 
history can immediately be scrutinized, that process seems somewhat archaic.

A handful of new national companies — estimates range from a half dozen to 
two dozen — are attempting to revolutionize tenant screening.

Landlords who subscribe to these services can mouse-click into utility bill 
records, eviction proceedings, bankruptcy and tax lien files. They can 
check national criminal databases, sex offender lists, the Treasury 
Department's Web site of suspected terrorists, drug traffickers and money 
launderers. They can even — at least through one company — examine previous 
landlords' assessments of a tenant's habits: noisy? destructive? litigious? 
drug using?

The chief executive of one of the most comprehensive of those screening 
companies, Jeff Cronrod of Fidelity Information in Pacific Palisades, 
Calif., said that approximately 8,000 building owners and management 
companies subscribe to his service, and about 50,000 prospective tenants 
are screened each month. "We're approaching a million tenants who have been 
screened in one way or another" since the company evolved from a rent 
collection agency in 1995, he said.

Such services could prove attractive to co-op and condominium boards, 
particularly in the New York area where potential buyers are more 
rigorously screened than perhaps anywhere else in the country.

Stuart M. Saft, chairman of the Council of New York Cooperatives and 
Condominiums, said he was aware of isolated instances where boards have 
used a national screening company to dig deeper after specific concerns 
about a buyer arose. "But when they become aware of the ready availability 
of more detailed information," Mr. Saft said, "many boards will probably 
choose to utilize these services."

Mr. Cronrod of Fidelity Information said: "Landlords have a right to know 
who is going to be living in their building, and so do the tenants who are 
already there. In these times, it's important to know who we are dealing 
with, not just apartment owners, but all of us — employers, lenders, even 
on a personal level. Sometimes we have to give up a little bit of privacy 
to feel more secure."

Privacy rights advocates are concerned.

They worry about "mixed files," instances where someone is denied a place 
to live because their name is similar to someone with a blemished record. 
They worry about identity theft, about who inputs the information and who 
has access to it. They worry about incomplete records from housing court, 
indicating that a case has been filed but not disclosing the outcome, or 
even that it was the tenant who sued the landlord.

"Even if the tenant prevails," said Beth Givens, director of the Privacy 
Rights Clearinghouse, a nonprofit public advocacy group in San Diego, "that 
information becomes a part of these tenant screening services and the 
tenant ends up blacklisted."

Larry Rosenberg is president of Rent-direct.com, an Internet company that 
provides information to would-be renters about apartments available in what 
he says are approximately 15,000 buildings in the five boroughs, 
Westchester County and northeastern New Jersey. For a fee of $195, 
apartment seekers can click into the company's listings for up to three months.

But Mr. Rosenberg's company is also, in effect, a regional distributor for 
the national tenant screening companies hoping to replace the local 
mom-and-pop operations that still, to a large extent, dominate the 
screening industry.

"What we have is a Web site portal for the landlords who give us listings," 
Mr. Rosenberg said. "We wanted to offer them a one-stop-shop service for 
not only listing and renting their apartments, but also for following up on 
any tenant they want to screen."

"In the past," he continued, "everything had to be faxed over to the 
company that was doing it; these were small, locally based companies. And 
then you would wait hours and sometimes a day or two to eagerly find out if 
your prospect met the requirements."

Now, it takes minutes. "Once you're set up," Mr. Rosenberg said, "it's a 
snap to get any kind of tenant screening quickly and cheaply."

John Restivo, the president of a national screening company, 
Youcheckcredit.com, said: "We all kind of do the same things: credit 
reports, eviction reports, criminal reports, sex offender lists, which is 
separate from criminal. And once the client decides which services they 
want to order, they click `submit' and wait 5 to 10 seconds and an easy to 
read report comes up." The cost of a search by Youcheckcredit.com into each 
prospective tenant's background is $9.95 to $34.95, depending on its 
components.

Mr. Cronrod, at Fidelity Information, detailed his company's screening 
menu. "These are retail prices, and our larger clients pay less," he said. 
The basic report, costing $9.95 for each prospective tenant, provides only 
the applicant's credit history from one of the three major national credit 
reporting companies: Equifax, TransUnion or Experian.

"The next is Tenant Alert Extra," Mr. Cronrod said — for $12.95. "You get 
the basic report, plus Matchmaker kicks in — that's where the landlord can 
set his own parameters."

About 30 specific ways of filtering the information are available. "But, 
for example, if you were a property owner," Mr. Cronrod said, "a simple one 
would be that you want the tenant to earn at least three times the amount 
of the rent. Or you may want him to have no more than two collection 
accounts; that means he's been turned over to a collection agency."

The landlord might choose to rule out any applicant who has not held his 
current job for at least a year. "But you could set whatever parameters you 
want," Mr. Cronrod said, "earnings ratio; how long was he at his previous 
address; how much debt on his credit cards; how many times he's been late 
more than 30 days, 60 days, 90 days, 120 days."

This level of service can also, among other things, analyze the applicant's 
utility payment history: gas, electric, water, telephone. "What you're 
doing is sort of creating the perfect applicant, setting the bar," Mr. 
Cronrod said.

The next package is called Tenant Alert Eviction, for $15.95. "It includes 
everything I already mentioned plus a nationwide eviction search," Mr. 
Cronrod said, "whether or not they've been evicted or ever skipped out."

"And it searches databases around the country for tenant history and 
habits," he said, "if they are an abusive tenant, whether they vandalized 
or made chronic late payments, even if they are up to date." His company, 
Mr. Cronrod said, also asks landlords who use his service to input 
assessments of their tenants' behavior.

The most comprehensive screening program available is Tenant Alert Value 
Package, for $29.95. "It's everything I've mentioned plus the criminal 
information," Mr. Cronrod said, "everything from someone who may have a 
history of domestic violence — that would play in the forefront of a 
landlord's concerns — and, of course, they look at other violent crimes as 
well."

Mr. Cronrod said his company "interfaces all of the state and local courts, 
with probably 30 or 40 repositories for criminal information — some 
national, some regional, some local" — as well as a national sex-offender 
database.

And then there is the "terrorist database that specifically comes from the 
Office of Foreign Assets Control in the Department of the Treasury," he 
said, "and that office collects information from the C.I.A., the F.B.I. and 
some other national security agencies. It's essentially a compilation of 
terrorists, money launderers and international drug traffickers."

Mr. Restivo of Youcheckcredit.com cited an instance where a national 
criminal search scored a hit. "We have a property in California that used 
to order a statewide criminal report," he said, "and one time they 
accidentally ordered the national."

"All the information on the applicant indicated that he had lived in 
Florida and New York," Mr. Restivo continued. "But it came out that he had 
committed an armed robbery in Arizona. With the national, it will pick up 
things, search areas that you don't even know to check."

"The guy had served his time," Mr. Restivo added. "No, he didn't get the 
apartment. You just don't want them living next to you."

Mr. Cronrod, asked what happens when a search of the Treasury Department's 
database scores a hit, said: "The computer will generate a report that this 
individual has applied for an apartment in Boca Raton or Manhattan or Long 
Island, wherever you like. We then are taken out of the loop, and the 
Treasury Department contacts the landlord, usually by phone, and talks 
about it."

FOR Ronni Lynn Arougheti, all of that is "a little bit scary."

Ms. Arougheti is president of Heron Ltd., managers of 95 buildings in the 
New York area, about a third of them rentals. "I don't think the managing 
agent's job is law enforcement," she said. "Mr. Cronrod's talking about 
heading in that direction."

"I absolutely am sympathetic to the fact that we don't want to rent to a 
terrorist, or people who would jeopardize other tenants in the building," 
Ms. Arougheti continued. "But there's got to be a balance between that Big 
Brother thing and the fact that these are people's homes."

Claudia Justy, executive director of the Community Housing Improvement 
Program, an association of 2,000 building owners — most of them midsized 
buildings in the boroughs outside of Manhattan — said she could not "speak 
for my membership on this."

"But would people want to use it?" Ms. Justy continued. "I think that any 
owner wants useful tools to manage their buildings. If this is proved to be 
something that would be more reliable than searches now, I'm sure people 
would be interested."

In the most affluent sections of the city, however, said Nancy Packes, 
president of Halstead/Feathered Nest Leasing Consultant, the instantaneous, 
broad-brush scrutiny of an apartment-seeker's history by the national 
companies would be "ludicrous."

Ms. Packes's company handles about 5,000 tenant applications a year. "When 
you're dealing with a higher-income tenant, which we typically are in 
Manhattan, these are solid citizens with long credit histories," she said. 
"It requires more of a personal touch: calling people, evaluating factors 
in relationship to each other. Usually, the prior landlord evaluates the 
tenant for the new landlord. Verification requires communication; it is not 
instant."

Using a national service, Ms. Packes said, "would be like going after a 
mosquito with an elephant gun."

Whatever the profile of those most likely to be scrutinized, privacy and 
civil liberties advocates raise red flags.

"We've had people contact us who are attempting to rent and find they've 
been essentially blacklisted," Ms. Givens of the Privacy Rights 
Clearinghouse said. It can happen in several ways.

"One is called `mixed files,' " said Chris Hoofnagle, associate director of 
the Electronic Privacy Information Center, a nonprofit group based in 
Washington. "It's where the information from one individual is combined 
with another."

It could happen to people "with similar names, not even the same name," Mr. 
Hoofnagle said, "or similar Social Security numbers."

The screening companies use algorithms — instructions sometimes based on 
overlapping factors — for their computer searches. "It means you might be 
identified not by your full name, but a part of your name," Mr. Hoofnagle said.

In July 2002, a federal jury in Oregon awarded a plaintiff $5.3 million in 
punitive damages in a case involving TransUnion, one of the three major 
credit reporting companies. "A woman named Judy Thomas was mixed with a 
woman named Judith Upton — yeah, Upton," Mr. Hoofnagle said. "Both women 
have a very similar Social Security number, so the algorithm couldn't 
distinguish between them."

"For years, she tried to solve the mixed-file problem," he said.

Mr. Restivo, however, said such mixups are rare. "It doesn't happen very 
often that we get these mixed files," he said. "You might get the son 
versus the father, a junior-senior situation. That's the only time I've 
ever seen it happen."

Identity theft is another concern.

Ms. Givens said, "If an impostor has used the victim's identity to rent an 
apartment, then not paid the bill, there's probably an eviction notice on 
record."

"They stay a few months and move out," she said, "but there's a court 
record with the innocent person's name on it. When the innocent individual 
attempts to find an apartment, they are turned away."

The Federal Trade Commission, in its 2003 Identity Theft Survey, found that 
there were 9.91 million victims of identity theft in the nation in 2002, 
with 2 percent — or about 200,000 — of those cases involving an impostor 
renting housing under an assumed name.

JAMES B. FISHMAN, a partner in the Manhattan law firm Fishman & Neil, which 
primarily represents tenants, said another serious problem is the use of 
housing court case filings, rather than judgments or final dispositions, by 
the screening companies. "This system drags into it all tenants who have 
been named in housing court proceedings, regardless of whether there's any 
degree of fault on their part," he said.

Under a Freedom of Information Act request, Mr. Fishman received a copy of 
the New York State court system's Revenue Generation Report, which shows 
that for the year ended on March 31, 2002, approximately 25 companies paid 
a total of $1,089,424 for the purchase of housing court records. "It's 
absolutely not just closed cases," he said. "A lot of the reports simply 
say, `Case Filed,' and not the disposition, the actual outcome."

At the same time, Mr. Fishman said, his information request showed that the 
court system "sells the records for those cases where it was the tenant who 
sued the landlord, let's say in order to get repairs, because those are 
also brought in housing court. I think that's pretty scary."

Even when there are grounds for a tenant to be taken to court, the effects 
can be disproportionate and long lasting. A client of Mr. Fishman, who 
spoke on condition of anonymity, said that in 1996 and '97, after she 
became seriously ill and fell behind on the rent for her Midtown apartment, 
she was taken to court three times. In one case she was able to repay the 
full rent; in another a settlement was reached; and after the third case 
she moved out, living, over the last five years, first with a friend and 
then by subletting a co-op.

Now, with the sublet apartment having been sold — and back on her feet — 
the woman has had applications for several rental apartments rejected. "I 
got this letter from the credit company showing that there have been three 
cases filed against me in housing court," she said. "What it never showed 
was the disposition of the cases. The problem happened five years ago. 
You're a deadbeat for the rest of your life?"

Cases like that, said Mr. Hoofnagle of the Electronic Privacy Information 
Center, compromise "the concept of social forgiveness, that past mistakes 
are eventually forgiven."

To be sure, Mr. Hoofnagle said: "We are talking about renting people's 
property, and landlords should have some say over who lives in their 
buildings. However, the risk of tenant screening is that it can create a 
category of people who can't find anywhere to live."

Donna Lieberman, executive director of the New York Civil Liberties Union, 
agrees that "it is understandable and appropriate that landlords engage in 
reference checks."

At the same time, there are broader concerns, Ms. Lieberman insisted, 
particularly about screening companies tapping into databases like the one 
maintained by the Department of the Treasury. "Who knows how a person gets 
on the list, how you get off the list," she wondered. "Who is investigating 
the people who get access to the list to make sure they are not abusing it?"