The New York City affordable housing lottery

Credit check requirement removed; illegal immigrants included

On August 21, New York City's Department of Housing Preservation and Development and the NYC Housing Development Corporation announced changes to their affordable housing lottery application that will further increase access for a wide range of New Yorkers to qualify for affordable housing.

The updated guidelines will offer an option to provide “12 months of positive rent payment history” instead of submitting to a landlord-initiated credit check. The new policy applies to all New York City residents, including those who entered the United States illegally.

In the official press release, Bitta Mostofi, Commissioner for the NYC Mayor’s Office of Immigrant Affairs, proudly proclaimed “These new changes are a step towards promoting greater racial equity in our housing market and greater access to affordable housing, regardless of immigration status”, adding “By eliminating requirements that unnecessarily and disproportionately impact working class immigrant families and people of color, HPD continues to show our City’s commitment to racial and immigrant justice.”

What information do lenders look for in a credit report?

The Credit Education section of the Fair Isaac Corporation (FICO) website explains what type of information a lender looks for in a credit report.

The first thing any lender wants to know is whether the applicant's credit payments have been made on time. This is one of the most important factors in calculating a FICO score.

Amounts owed are another important factor. When a high percentage of a person's available credit has been used up, this can indicate that the applicant is overextended, and is more likely to make late payments or to miss payments altogether.

A large number of inquiries from potential creditors indicates greater risk. According to the myFICO site, people with six inquiries or more on their reports are eight times more likely to declare bankruptcy than people with no inquiries.

People who recently entered the country illegally will probably not have built a positive credit history. These illegals will now be able to compete for affordable housing with legitimate residents of New York City.

Still, New York City officials have proudly proclaimed their “generous” offer to give away other people's money.

Local reaction

In a New York Post report on the announcement, Councilman Eric Ulrich (R-Queens) remarks “It’s just the latest idiotic idea to come out of this administration”. He observes, accurately, that “The mayor is setting up people to fail and is doing a disservice to New Yorkers who desperately need affordable housing.”

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Disclaimer: Information on this website is not legal advice.