This week the U.S. Department of Housing and Urban Development (HUD) announced plans for additional steps it plans to take related to criminal history screening. This comes on the heels of the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) announcing a Request for Information (RFI) about background tenant screening issues related to rental housing.
HUD stated its announcement follows a comprehensive review of HUD regulations, policies and guidance. It further stated that new guidance and technical assistance issued by HUD will “assist PHAs and HUD-affiliated owners in applying these principles.”
HUD plans to issue new guidance and technical assistance to assist PHAs and HUD-affiliated owners in determining what convictions are relevant to health and safety and how to conduct an individualized assessment when reviewing criminal history records. Additional information and more details related to this announcement are expected in the next several weeks.
A previous HUD-wide review of criminal screening issues determined that many of HUD’s regulations and sub-regulatory provisions could be improved and clarified to ensure that PHAs and HUD-affiliated owners are following recognized best practices, including:
- Not automatically denying an applicant housing assistance simply based on the presence of a criminal conviction, other than where explicitly prohibited by federal law.
- Disregarding criminal history that is unlikely to bear on fitness for tenancy, such as arrest records, sealed or expunged records, older convictions, and convictions not involving violence or harm to persons or property.
- Using individualized assessments to determine whether applicants truly pose a future risk to persons or property, taking into account other factors such as the applicant’s employment, engagement in alcohol or drug treatment and constructive community involvement.
- Providing applicants with criminal history records with reasonable time and opportunity to provide supporting information regarding mitigating factors before an admission decision is made.
HUD notes that many of these principles have already been implemented by many housing providers and public housing agencies and that HUD’s forthcoming notice of proposed rulemaking will propose to require other housing providers and PHAs to do the same.
CFPB and FTC RFI
Meanwhile, there is an ongoing request for comment related to criminal screening of renters underway at the FTC and CFPB.
As part of the RFI, the FTC and CFPB are asking current tenants, prospective tenants, advocacy groups, commercial and individual landlords, property managers, background screening companies, other consumer reporting agencies and others to weigh in on a wide array of issues that affect tenant screening such as:
- how landlords and property managers use criminal and eviction records to make housing decisions;
- how potential inaccuracies in criminal and other records affect rental housing decisions;
- whether consumers are informed about the criteria used in tenant screening or notified about what information in their background check led to their rejection;
- how landlords and property managers are setting application and screening fees;
- how algorithms, automated decision-making, artificial intelligence or similar technology are used in the tenant screening process; and
- whether there are ways to improve the current tenant screening process.
The FTC and CFPB state that they are seeking to identify practices that may unfairly prevent consumers from obtaining and retaining housing, and that comments will help inform enforcement and policy actions. They also argue that they have jurisdiction over these issues because the agencies both enforce the Fair Credit Reporting Act (FCRA). However, it is expected that commentors may argue that this jurisdictional reach does not extend to policymaking for housing issues.
The topic of tenant screening also came up this week in a Senate Committee on Banking, Housing, and Urban Affairs hearing entitled “Oversight of the Credit Reporting Agencies.” Senate Banking Chairman Sherrod Brown (D-OH) questioned Mark Begor, CEO of Equifax Inc.; Chris Cartwright, president and CEO of TransUnion; and Brian Cassin, CEO of Experian, about their practices in this area. The discussion aligned with the inquiries from the CFPB, FTC and HUD, ensuring that proper consumer protections are in place when landlords seek information about potentials renters.
It is clear that both federal agencies and Congress are interested in determining if additional policymaking is warranted in regard to resident screening and credit reporting in this area.
As lawmakers and regulators explore these issues further, they will be tasked with ensuring a safe and successful housing community for all participants, accuracy and uniformity in the credit reporting system, and balancing comprehensive input from stakeholders and questions about which policymakers have the appropriate jurisdiction over this debate.
There have also been several recent national discussions about FCRA preemption issues. Considering these developments through a comprehensive lens, it will be important for stakeholders to educate policymakers about their views on tenant screening, work to ensure that any new requirements align with industry best practices, and ensure that any regulatory creep in this area does not lead to uninformed new policies.
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