WASHINGTON – May 18, 2016 – The Department of Housing and Urban Development (HUD) published Fair Housing Act guidance on April 4 that raised concerns for housing providers who use criminal history screening processes to make decisions about sales, rentals, financing and other real estate activity. Since then, real estate professionals have been asking what it means.
Experts at the Realtors® Legislative Meetings & Trade Expo in Washington, D.C., last week offered a number of tips for staying in compliance, especially since nearly a third of Americans –100 million people in all – have a criminal record, with an additional 650,000 released from prison each year.
“The three things we need to do when developing a program are have consistent procedures, uniform standards and an explanation for criminal background check programs,” said Caroline Elmendorf, chief compliance officer for Bozzuto Group, at a forum titled, “Criminal Background Checks, Fair Housing Compliance and You.” She also added: “HUD has set a very high bar for what explanations we use.”
HUD’s guidance comes on the heels of a recent Supreme Court ruling that said a party may prove violations of the federal Fair Housing Act by either showing intentional discrimination or that a certain practice has an adverse or “disparate impact” on protected classes.
While persons with criminal records are not a protected class under the Fair Housing Act, HUD’s recent guidance maintains that criminal history-based barriers to housing have a statistically disproportionate impact on minority groups. And since minorities are a protected class under the Fair Housing Act, HUD’s guidance says that creating arbitrary or blanket criminal-based policies and restrictions could potentially violate the Fair Housing Act.
Although Elmendorf’s suggestions should not be considered legal advice, her general tips for real estate professionals, include:
Run a criminal background check last, and only after candidates have passed financial and other screening processes – until credit checks come back clean. However, she admitted that there are timing and logistical issues related to splitting that process.
Consider the nature and severity of the crime, as well as how recently it occurred, when designing criminal screening policies. For example, Elmendorf suggested that companies decide whether to exclude misdemeanors and non-violent felonies, like gambling or tax fraud.
Establish a look-back period that begins at the time of conviction. While the law isn’t crystal clear, HUD cited a study supporting a seven-year look-back period, and that state Fair Credit Reporting Act laws also apply a maximum seven years look back.
Allow individuals to present mitigating and extenuating reasons for why they should be considered in light of a conviction. Those may include facts and circumstances surrounding criminal conduct, age at the time of conviction, evidence of good tenant history, employment or rehabilitation.
Elmendorf pointed to criminal background checks that focus on whether or not a potential tenant or homeowner has been arrested, rather than criminally convicted, as an example of policies that might be “tightened” for compliance. She also noted that there might be a benefit to policies that single out violent crimes because a violent past could be tied to resident safety concerns.
NAR has summarized HUD’s guidance in a “Do’s and Don’ts” guide, with tips that urge real estate professionals to uniformly consider criminal history, regardless of an individual’s protected class status, while avoiding policies that exclude anyone based on arrest records alone.
“Part of being a Realtor is committing to the belief that everyone has a right to live wherever they can afford, and that means strong support for the Fair Housing Act and its mission,” says NAR President Tom Salomone.
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