May 16, 2023

The U.S. Department of Housing and Urban Development (HUD) declared it would take more steps associated with criminal history screening. This decision comes after the Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB) requested information concerning background tenant screening. This Request for Information (RFI) addressed concerns associated with rental housing.

According to HUD, it comprehensively reviewed its policies, guidance, and regulations before making this announcement. In addition, the Department planned to issue new technical assistance and advice to help HUD-affiliated owners, including public housing agencies (PHAs). For example, it would help determine a conviction’s relevance to safety and health and detail how to conduct individualized assessments when considering criminal history. They also plan to release additional information and details concerning this announcement in the coming weeks.

After reviewing criminal screening issues, HUD improved some regulations and sub-regulatory provisions. By clarifying these provisions, the Department could ensure that HUD-affiliated owners and PHAs follow the best practices. Examples include the following:

• “Not automatically denying an applicant housing assistance 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 pose a future risk to persons or property, considering other factors such as the applicant’s employment, 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 making an admission decision.”

HUD pointed out that several of their public housing agencies and providers have already implemented these principles. As such, the forthcoming notice of proposed rulemaking will become required for other PHAs and providers. The FTC and CFPB also intend to make housing more obtainable for people with a criminal record. Accordingly, they have an ongoing request for comment concerning the criminal screening of applicants for rental housing.

The CFPB and the FTC have requested information on several issues affecting tenant background screening. They have proposed these questions to prospective tenants, property managers, current tenants, commercial and individual landlords, advocacy groups, background screening companies, consumer reporting agencies, and others. Some of the issues they touched upon include the following:

• “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 know the criteria used in tenant screening or learn what information in their background check led to their rejection;
• How landlords and property managers set application and screening fees;
• How the tenant screening process uses algorithms, automated decision-making, artificial intelligence, or similar technology; and
• Whether they can improve the current tenant screening process.”

The CFPB and FTC want to identify practices that could unfairly keep consumers from attaining and retaining housing. In addition, they believe the comments will provide information that will help the agencies decide on enforcement and policy actions.

Congress has also been considering tenant screening. Recently, a Senate Committee discussed the subject during a Banking, Housing, and Urban Affairs hearing. The discussion emphasized the importance of adequate consumer protection. The Committee also discussed ensuring that landlords observed consumer protections correctly when obtaining information about prospective renters.

With the increased attention to tenant screening, landlords and property managers must ensure they follow all federal, state, and local regulations when conducting these screenings. The best way to ensure compliance with these regulations is to partner with a background check company. The right partner will prove familiar with tenant screenings and up-to-date with all relevant laws and regulations.

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