No Filter for You: Advocating for Rental Housing Access in the Modern Rental Market

Eric Dunn, Staff AttorneyNorthwest Justice Project401 Second Ave. S., Ste. 407Seattle, Washington 98104Tel. (206) 464-1519EricD@nwjustice.org

RCW 59.18.257

Old RCW 59.18.257 LL could charge actual costs for

screening LL had to disclose name & address of

screening service and “what screening entails”

$100 statutory penalty + costs & attorney fees

New RCW 59.18.257 Pre-disclosure of criteria, screening

information Written adverse action notice that must

give reason

What makes a good tenant?• Amount and stability of income, assets• Other obligations are manageable• Credit history does not suggest likelihood of

default

Can meet financial

obligations

• Applicant not likely to damage the premises• Applicant likely to follow basic rules• Applicant likely to coexist well with

neighbors

Behavioral Suitability

• Denial for reason(s) not related to any of the above considerations: red flag

• Fair Housing, CPA/UDAP (some states)

Evaluating Rental Applicants

Consumer report designed to assist a residential housing provider in deciding whether to accept a rental applicant

Usually prepared by specialty CRA Approximately 650 in USA (NY Times, 11/26/2006)

Typical Contents: Financial credit report (usually from “Big 3”) Criminal background check Civil litigation/eviction records Interviews with past landlords, references Recommendation/score/analysis

Tenant-Screening Reports

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What does a tenant-screening report look like?

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Credit Information

ID Verification

Employment Verification

Terrorist Database Search

Public Records Disclaimer

Miscellaneous Disclaimers

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Reference Check

Criminal History

Sex Offender Check

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Eviction History

Collection Accounts & Civil

Judgments

Recommendations

Duplicative fees

Inaccurate/Improper consumer reports

Overly-restrictive admission policies

Barriers to Obtaining Housing

Tenant-Screening: Costs

Tenant-screening reports typically cost about $30-$75 per adult applicant

Landlords pass 100% screening charge on to applicants Moral hazard: landlord chooses product but applicant pays

Applicants who are rejected must usually pay screening fees over again to apply elsewhere (to purchase new report) New report will contain substantially identical information

Limit screening fees Nominal cap Require refund if

applicant denied

“Portable” screening reports

Controlling Screening Costs

Applicant purchases one screening report Has all the basic components, is prepared

according to recommended methods Applicant can shop that report around to

unlimited number of housing providers for a specified time period (30 days) Landlords can access the report for free Landlords can order a different report at their

own expense

“Portable” Screening Reports

MyScreeningReport.com

1. Tenant orders report, pays fee to Moco, Inc.

2. Moco prepares report, uploads to secure website

3. Tenant receives password to access report Tenant can review accuracy, completeness

4. Tenant can share the report unlimited number of times simply by providing password

Policy implications

Applicants with negative background info. often must pay $hundreds before finding housing• Substantial drain on low-

income households and on social service agencies, philanthropic orgs.

Fair housing impact is unknown• Screening fees deter applicants

with imperfect credentials from applying to housing perceived as more selective

• What is racial/ethnic impact?

Ubiquitous, comprehensive screening of applicants

Applicants compared with each other (most qualified applicant) rather than to an objective policy (first qualified applicant)

Categorical exclusions (evictions, criminal records)

Characteristics of a Tight Rental Market

Washington’s rental vacancy rate has consistently remained significantly below average U.S. levels

2005-1

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2012-20

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Rental Vacancy Rates 2005-Present

Wash. USA

Washington: 64.8% home ownership rate On any given night, it is estimated that almost

23,000 people are homeless ; over 100,000 people become experience homelessness at some point each year

As of August 2012, average rent for an apartment within 10 miles of Seattle is $1,517

1-BR average: $1,303/mo.

2-BR average: $1,763/mo.

Problems in Screening Reports

That’s not my name!

Inaccura

te reports:

• Report contains negative information that isn’t true

• Report contains true but misleading information

• Incomplete report (omits favorable information that mitigates other (i.e., negative) information

Improper reports:

• Negative information appears on report despite some law or policy prohibiting its inclusion, such as 15 USC 1681c(a) or state law restriction

Common Problems:

Serious errors common in reports

“79 percent of all credit reports contain some type of error—and 25 percent contain such serious errors that those individuals could be denied credit.”

Dakss, Brian, “4 in 5 Credit Reports Have Errors,” CBS News, Feb. 11, 2009

A newspaper investigation concluded that about 30% of credit reports on Ohio consumers contained significant errors

Marrison, Benjamin J., “Our digging finds mess that cries for redress,” Columbus Dispatch, May 5, 2012

Tenant Screening Report

Criminal

Credit

Eviction

15 USC 1681g:“(a) Every consumer reporting agency shall, upon request, and subject to section 1681h (a)(1) of this title, clearly and accurately disclose to the consumer: (1) All information in the consumer’s file at the time of the request…”

FCRA disclosure requirements

Very few screening companies will prepare a report for a consumer (no information on file)Unfair practice under CPA/UDAP statutes?

Hundreds of tenant-screening companies are active in the USA…

Application Received

Screening Report

Obtained

Applicant Rejected

Next Applicant

Considered

Application Rejected

Report Ordered

Report Received

Dispute Submitted

Reinvestigation

Results Reported

1-48 hours 30+ days

“The Unhouseables”

“…the increasingly popular use of tenant screening reports has resulted in a new class of people who are unable to access rental housing because of past credit problems, evictions, poor rental histories or criminal backgrounds...” HousingLink, “Tenant screening agencies in the Twin

Cities: An overview of tenant screening practices and their impact on renters,” Summer 2004

Landlord specifies rental criteria Often suggested by CRA

CRA obtains, reports information relevant to criteria Details, nuance omitted

CRA makes rental recommendation Accept, accept with conditions, deny

Landlord follows recommendation

Formulaic decision-making

Rental applicants are commonly denied for criminal or unlawful detainer records …

Fair Housing Doctrine

“It is thus well established that liability under the Fair Housing Act can arise where a housing practice is intentionally discriminatory or where it has a discriminatory effect. A discriminatory effect may be found where a housing practice has a disparate impact on a group of persons protected by the Act, or where a housing practice has the effect of creating, perpetuating, or increasing segregated housing patterns on a protected basis.”

--U.S. Dept. of Housing & Urban Development, Proposed Rule on Implementation of the Fair Housing Act’s Discriminatory Effects Standard, 76 Fed. Reg. 70921 (Nov. 16, 2011)

Disparate Impact/Discriminatory Effects Outwardly neutral practice that causes either:

A significantly adverse or disproportionate impact” on members of a protected class; or

That “perpetuates segregation and thereby prevents interracial association”

Usually requires proof by statistical evidence

A practice that has a discriminatory effect is unlawful unless justified by “business necessity” Contributes substantial value to landlord’s business No less-discriminatory alternative available

African-Americans are 13.6% of U.S. population 2010 US Census

African-Americans are arrested and incarcerated at rates disproportionate to their numbers About 28% of persons arrested each year

FBI Uniform Crime Reports, 2010 Make up 40.1% of U.S. prison population

6.1 times more likely to be incarcerated than whites Bureau of Justice Statistics, June 2010

Blacks are 3.6% of Washington population, but 18.8% of Washington’s incarcerated population Wash. Dept. of Corrections, March 31, 2012

Disparate Impact: Criminal Records

Blanket exclusions of rental applicants who have criminal records cannot be justified by business necessity.

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After 5 Years, Offenders No More Likely Than Non-Offenders to Be Re-Arrested(Kurlychek, et al. “Scarlet Letters & Recidivism: Does An Old Criminal Record Predict Future Criminal Behavior?,” 2006)

Old criminal records do not reasonably predict future criminal behavior

Less-Discriminatory Alternatives

Housing provider can use a case-by-case review Criminal record should result in denial only where the criminal

record suggests the applicant poses an ongoing threat of rule violations, property damage, or criminal activity

Factors to consider: What was the offense? Does it relate to housing? How? What were the circumstances surrounding the offense?

When did the offense occur? How old was the applicant? Is there evidence of changed circumstances?

Drug/alcohol rehabilitation? Psychiatric treatment? Employment/other indicia of stability?

“’It is the policy of 99 percent of our customers in New York to flat out reject anybody with a landlord-tenant record, no matter what the reason is and no matter what the outcome is, because if their dispute has escalated to going to court, an owner will view them as a pain,’ said Jake Harrington, a founder of On-Site.com…”

--New York Times, Nov. 26, 2006

Eviction Records Eviction filings detected through court databases

Data entered by court clerk upon case filing Circumstances, case outcomes not reported becausethey are not relevant to decision matrix

Public Records Systems Public records are often created for some purpose

other than serving as de facto consumer reports. May be inaccurate, incomplete or out-of-date

Best remedy: seal/delete/correct the public record Failure to have procedures for correcting or

removing harmful information from public records may violate due process clause Humphries v. LA County, 554 F.3d 1170 (9th Cir. 2009),

rev’d on other grounds, 130 S.Ct. 447 (2010) “Stigma-Plus Test;” Paul v. Davis, 424 U.S. 693 (1976)

Deprivation occurs if state creates a “stigma;” and State imposes tangible burden on person’s ability to obtain

a right or status recognized by state law

Unlawful Detainer Records

Milwaukee, Wisc. 2009: low-income African-American women, especially single mothers, faced eviction at disproportionately higher rates.

Desmond, Matthew, “Eviction and the Reproduction of Urban Poverty,” Paper presented at the American Sociological Association Annual Meeting, Hilton San Francisco, San Francisco, CA, Aug 08, 2009

Oakland, Cal. 2002: 78% of “30-day no cause” evictions were issued to “minority households”

Empirical Studies (2) Chicago, Ill. 1996:

72% of defendants appearing in eviction court were African American, 62% were women

Philadelphia, Penn. 2001: 83% of tenants facing eviction were “nonwhite,” 70%

were “nonwhite women” Other studies in Baltimore, NYC, and LA “have shown

that those who are evicted are typically poor, women, and minorities.” Hartman, Chester & David Robinson, “Evictions: The Hidden Housing

Problem,” 14 Housing Policy Debate 461 (2003)

Eviction Demographics: King County, WA

King County Eviction Data A 2010 Study by students in the UW-Bothell Policy

Studies Program* found that: A moderate negative relationship exists between the

percentage of white tenants in a zip code area and that zip code area’s UD rate

A moderate positive relationship exists between the percentage of non-white tenants in a zip code area and that zip code area’s UD rate

Strongest Correlations: Black, Multi-Racial tenants

*Gehri, Leah M., John Lee, Logan Micheel and Damian Rainey,“Tenant Screening Practices: Evidence of Disparate Impact in King County, Washington,” March 16, 2010

Citizenship/Immigration status requirements Disparate impact on basis of national origin

“No Section 8”/source of income discrimination Disparate impacts on women, people of color,

families with children, and people with disabilities Restrictions on military deployment/absence from unit

Tends to cause disparate effect on military personnel Charging for background checks on young children

Disparate impact on families with children Blanket exclusion of people with eviction suits

Disparate impact on racial, gender, fwc grounds

Suspect admissions policies

Fair Tenant Screening Act (Wash. SSB 6315 of 2012) Requires disclosure of criteria, reason for adverse action Facilitates fair housing challenges Original bill would have prohibited CRAs from reporting

certain dismissed UDs (also DV-related records) Companion Bill (SB 6321 of 2012)

Would have facilitated unlawful detainer defendants in obtaining orders to seal dismissed eviction suits

California does automatically on filing, Cal Civ. Pro. Code §1161.2; Minnesota has an “expungement” procedure, Minn. Stat. 484.014

Amendment would have prohibited LL from denying applicant based on dismissed eviction suit (SSB 6321)

Addressing categorical exclusions