HUD Guidelines to Incorporate in Your Tenant Screenings

Whether you screen tenants in-house or outsource the task to a third-party company, ensure you are complying with the Fair Housing Act. Recently, HUD’s Office of Fair Housing and Equal Opportunity issued a Guidance on Application of the Fair Housing Act to the Screening of Applicants for Rental Housing. The guide points out that emerging machine-learning technologies have made the screening process more automated and could lead to discriminatory decisions in tenant selection. Whether the screening is completed by you or an outside company, you are responsible for rental decisions complying with the Fair Housing Act. What HUD recommends to avoid a potential discriminatory screening:

• Choose Relevant Screening Material
  • Screen applicants only for information relevant to the tenancy obligations. Past incidents irrelevant to a tenant’s obligations and unlikely to recur, such as an eviction due to job loss, should not be a basis for denials.
• Use Only Accurate Information
  • Certain types of inaccuracies are more likely to occur for members of some demographic groups than others, such as records attributed to the wrong person due to a same or similar name. Automated systems might misrepresent records with missing or unclear information if they are not programmed to account for those scenarios. For example, a court record may not label whether a felony versus a misdemeanor was committed. Ensure the records being reviewed are accurate to avoid discriminatory screenings.
• Follow the Applicable Screening Policy
  • Records outside the scope of a housing provider’s stated screening policy should not be considered. Check with your screening company to make sure they are using only your housing provider’s policy.
• Be Transparent with Applicants
  • Transparency helps ensure consistent, nondiscriminatory results by making sure everyone has clear, complete information. Applicants need to know how they will be screened to decide whether to pay an application fee and take the time to fill out an application
• Allow Applicants to Challenge Negative Information
  • Applicants should be allowed the opportunity to challenge any potentially disqualifying information. The applicant should be sent any information reviewed (e.g., their screening report) along with the specific standards they were screened for.
• Test AI for Fair Housing Compliance
  • Screeners developed through AI programs may be less transparent and more difficult to prove justification for an applicant’s denial. Ensure the screening test is understandable to both parties and is designed with attention to aspects likely to pose fair housing concerns.