Fighting Discrimination: NAR Strengthens Code of Ethics, Fair Housing Resources

By Susan Shackelford

Titled “What You Say Can Be Held Against You,” a recent Broker-in-Charge Briefing spotlighted NAR’s recent bolstering of the Code of Ethics as well as its fair housing program to combat discrimination. The briefing also focused on how to avoid fair housing issues with MLS listings.

Presented by Canopy Realtor® Association and hosted by President David Kennedy, the Feb. 12 Zoom meeting featured a panel of experts on fair housing, the Code of Ethics and Canopy MLS. Kennedy called them “titans of trust.”

The panelists were Alexia Smokler, NAR senior policy representative for fair housing; Michele McCaskill, vice president of risk management and assistant general counsel for Canopy Realtor® Association; and Debbie Wey, vice president of MLS administration for Canopy MLS.

Smokler addressed economic pitfalls of discrimination and NAR’s recent ramping up of fair housing resources and education, including a new interactive simulation tool for Realtors® called “Fairhaven.” McCaskill explained recent changes to the Code of Ethics and other NAR policies that broaden a Realtor’s® responsibility around discrimination. Wey shared tips on listing properties in Canopy MLS to preclude potential fair housing problems.

Here’s a look at each panelist’s key remarks.

Alexia Smokler, NAR Fair Housing Resources

Smokler led off the panelists by noting NAR’s expanded fair housing staff over the last year and a half. “Mine is a new position and one of three fair housing positions created in the last 18 months,” she said.

Smokler formerly worked at HUD for Bryan Greene, who had led fair housing enforcement at the agency. Greene joined NAR in its new director of fair housing policy in 2019; he has since been promoted to vice president for policy advocacy.

Greene had been at NAR only three weeks when the three-year Newsday study came out showing widespread sales discrimination at 10 real estate firms on Long Island. Such discrimination is not just against the law and unethical, “what’s more,” Smokler said, “making homeownership available to the broadest group of buyers is good for your business, our communities and our economy.”

She pointed out that many Black and Hispanic millennials are mortgage ready, there is an ownership gap of 30 percentage points between Blacks and whites, discrimination has stopped five million qualified buyers from owning homes (a Morgan Stanley study) and segregation in the Chicago metro area is costing the local economy $8 billion a year.

The upshot is reduced prosperity not only for those discriminated against but for everyone, Smokler said. “When some people can’t access the intergenerational wealth that comes from homeownership … the economy is held back and the size of the pie is decreased for all of us.”

After the Newsday story broke, NAR announced Fair Housing ACT!— which stands for Accountability, Culture Change and Training — in early 2020.

Under “Accountability,” NAR is developing a voluntary self-testing program on discriminatory practices to be used by brokerages. “We are creating a methodology that allows them to be tested, receive a confidential report and then to access remedial measures.” NAR is also “engaged in a review of licensure law in all 50 states and looking at fair housing enforcement and education,” Smokler said.

Under “Culture Change” and “Training,” firms can already access two online presentations. “Bias Override: Overcoming Barriers to Fair Housing” is a video of about 50 minutes that teaches about implicit bias — “the way our unconscious brains can cause us to treat those who are different from us unfairly, often without our conscious awareness,” Smokler explained. NAR will roll out CE-ready classroom curriculum on implicit bias this spring.

Fairhaven” is the fictional town of an online simulation by the same name. “Learners make their way through realistic scenarios, working against the clock to sell homes while confronting discrimination,” Smokler described.

“As they interact with clients and colleagues, they reach decision points,” she continued. “They will have the opportunity to make a sale if their choices are aligned with fair housing principles. If they fail, they will encounter more scenarios and have more opportunities to make sales.” The simulation provides feedback to participants and can take 60 to 100 minutes to complete depending on a participant’s performance.

Since Fairhaven released last fall, the feedback has been positive as more than 5,000 members have gone through it. “Some of them have told us that it opened their eyes to their own biases,” Smokler noted. “We’ve had other people say, ‘I have encountered this situation before and I wasn’t sure what to say. This has given me pointers on how to say to deal with it better next time.’”

Michele McCaskill, Code of Ethics Changes

McCaskill described four significant changes NAR recently made to expand discrimination responsibility for Realtors®.

The first is a change to Policy Statement 29, which formerly limited the Code of Ethics to real estate matters. Effective Nov. 13, 2020, based on an NAR Board of Directors vote, the Code of Ethics now extends to all activities by a Realtor®.

This change is an outgrowth of hate and harassing speech posted by Realtors® on personal social media in the wake of racial unrest in 2020. Realtor® associations fielded complaints from fellow Realtors® who felt like such language reflected badly on the profession.

In addition to the change to Policy Statement 29, Article 10 of the Code of Ethics was amended to include an additional Standard of Practice (SOP), 10-5, which deals specifically with speech. The SOP says, “Realtors® must not use harassing speech, hate speech, epithets, or slurs based on race, color, religion, sex, handicap, familial status, national origin, sexual orientation, and gender identity.”

“When Realtors® post hate speech, it could reveal a bias toward a particular class,” McCaskill said. “The Standard of Practice is based on particular types of speech and specific protected classes. Content, context and intent matter. Look at what was the actual content of what was said, the context in which it was said and the intent behind it.”

A two-part test will be used by the Association’s Professional Standards Committee to determine applicability, she said. Part One: Is the speech harassing, hate speech, epithets or slurs? Part Two: Is the speech based on a protected class? If the answer is “no” to either, the Code of Ethics does not apply.

Another area addressed by NAR was the definition of public trust. The definition now says that a violation of the public trust may have occurred if there was “discrimination against the protected classes under the Code of Ethics.” The previous definition required a finding of willful discrimination. The revised definition and can be found in Article IV, Section 2, of the NAR Bylaws.

The final changes to the Code of Ethics surround NAR’s Sanctioning Guidelines, found in  Appendix VII to Part Four of the NAR Code of Ethics and Arbitration Manual.

These guidelines suggest stricter penalties for a first-time offense if the violation includes a violation of Article 10 or Article 3 (SOP 3-11) of the Code of Ethics. The guidelines provide that any such violation be considered particularly egregious and that the discipline imposed by a hearing panel for a first-time offense can include suspension for up to three years.

Wrapping up her comments, McCaskill said, “The biggest takeaway is to know the Code of Ethics and to make sure your agents know the code. … I encourage you to download and distribute the Code of Ethics to your agents.” She also noted she is available for presentations to firms.

Debbie Wey, Fair Housing and MLS Listings

The Canopy MLS staff monitors listings for potential fair housing violations but doesn’t issue fines. “We check for potential violations to protect the MLS and our members from liability,” Wey said. “Legal action has shown that Realtors® can be successfully sued for listings on their website regardless of whether they are the author of the listings.”

If the MLS staff sees a potential fair housing concern in a listing, it contacts the listing agent by email and also copies the agent’s Member Participant. Also, if the MLS’s legal counsel feels strongly about the potential violation, the problematic words are removed from the listing immediately. Either way, “we send out courtesy notices and give the agent an opportunity to rephrase and come up with a better way to say it,” Wey said.

To avoid potential fair housing violations, Wey shared three listing tips:

  • In describing properties, don’t indicate a preference based on any of the nine protected classes: race, color, religion, sex, handicap, familial status, national origin, sexual orientation and gender identity.

“Describe the property, not who is best to live there,” Wey said, citing a recommendation from the National Fair Housing Alliance.

  • When listing properties in age-restricted 55+ communities, provide a Statement of Qualification with each listing. Information obtained from an officer of the homeowners association or from an authorized community representative, such as someone with the community’s management company, is sufficient. Wey said this requirement is based on Canopy MLS’s experience that age restrictions with neighborhoods can change.
  • Remember to adhere to the MLS’s rule of Clear Cooperation to ensure that sellers have the greatest of pool of prospective buyers. Clear Cooperation, which went into effect May 1, 2020, requires a listing broker to enter a property in the MLS within one business day of marketing the property. “This helps promote fair housing, lends itself to not excluding any person and supports the fact that the MLS exists for Realtor® cooperation,” Wey said.

Looking ahead, Wey provided a heads up on the listing term “master” bedroom, which has been under scrutiny since racial unrest in 2020.

The Canopy MLS Board of Directors will be looking at whether it will keep or eliminate the term, in light of RESO (the Real Estate Standards Organization) recently recommending a change from “master” to “primary.” HUD has cleared the “master” term as nondiscriminatory.