4 Tips for Complying with HUD's Title VI Guidance When Maintaining Waitlists

In the last year, HUD has directed more attention to how federally assisted housing providers are marketing their sites and operating their waitlists. Earlier this year, HUD released its first ever Equity Action Plan in coordination with the Biden administration’s whole-of-government equity agenda. As part of the plan, HUD’s Office of Fair Housing and Equal Opportunity (FHEO) has been earmarked to receive additional staffing and funding resources to keep pace with HUD’s obligations to process, investigate, pursue compliance reviews, and resolve fair housing complaints.

HUD’s equity plan also includes FHEO issuing guidance and new rules to strengthen the prohibition against discrimination in housing. In April, FHEO released marketing and household application guidance to assist owners in understanding and implementing more inclusive practices that are less likely to produce discriminatory results. In fact, FHEO’s guidance goes beyond what HUD formally required in the past. It requires a more proactive effort on your part to be in compliance.

In light of this new guidance, we’ll take a closer look at waitlist management practices intended to improve compliance with Title VI of the Civil Rights Act of 1964, which states that no person, on the grounds of race, color, or national origin, shall be denied participation in, be denied the benefits of, or be otherwise subject to discrimination under any program or activity that receives federal financial assistance.

Tip #1: Clearly Communicate Preferences, Waitlist Information

If a waiting list has preferences, it means that priority placement is given to applicants who qualify for a specific preference category such as elderly, disabled, or homeless. Applicants who don’t qualify for the listed preferences will have a longer wait than those who do qualify. In most cases, the head of household, co-head, or spouse must qualify for a preference for it to be applied, and official documentation must be submitted to prove the household qualifies.

Not all waiting lists have preferences, and the specific preferences associated with a waiting list vary. Clear communication is key to nondiscriminatory application of preferences and screening criteria.

FHEO guidance says detailed information in English and non-English languages should be available to potential applicants about screening criteria and preferences, what information may be requested and reviewed, and how applicants may contest adverse determinations.

Applicants should be made aware of how you may contact them, and what’s required to remain active on the waitlist. Also, you should keep such records as are necessary to evaluate the impact of screening criteria, preferences, and waitlist management practices, such as applications, requests for more information, decisions, appeals, etc.

In addition, HUD says your waiting list must include the following information:

• The name of the head of household;
• The date and time the application was submitted;
• The applicant’s preference status;
• The applicant’s annual income level for income-targeting purposes (for example, extremely low income, very low income, and low income);
• Whether the applicant needs an accessible unit, including the need for accessible features; and
• The unit size the applicant needs [Handbook 4350.3, par. 4-16(D)(3)].

HUD recommends owners not include applicants’ race/ethnicity, gender, or family size on waiting lists because that information doesn’t affect applicant selection and could result in discrimination. This information is collected and retained on pre-applications and applications and retained in site files, but you should avoid including these types of data on site waiting lists [HUD Handbook 4350.3, par. 4-16(D)(4)].

Tip #2: Review Site Marketing and Tenant Selection Plans

Your site should have both an Affirmative Fair Housing Marketing Plan (AFHMP) and a tenant selection plan. Review these documents and possibly update them based on the recommendations provided by FHEO guidance. Our June 2022 feature, “HUD Issues New Civil Rights Guidance on Marketing, Application Requirements,” goes over strategies to advertise your site and vacancies broadly so that all racial groups in a marketing area have knowledge of an opportunity to rent units in a particular building.

AFHMP. According to HUD, when opening waiting lists, the notice of this action must be announced in a publication likely to be read by potential applicants in the same manner (if possible, in the same publications) as the notification that the waiting list was closed [HUD Handbook 4350.3, par. 4-16(B)(2)(a)]. Advertisements should include where and when to apply and should conform to the advertising and outreach activities described in the AFHMP [HUD Handbook 4350.3, par. 4-16(B)(2)(b)].

Your AFHMP is a completed HUD Form 935.2A that your local HUD office has approved. You must keep a copy in your site’s files since HUD requires that it be available for public inspection at the sales or rental office [24 CFR 200.625]. The AFHMP outlines the strategies you must use whenever you market units at your site, including how to notify potential applicants that a waiting list is open. A section of the form asks for community contacts and methods of advertising to market the site.

HUD requires you to notify the “public,” meaning the target population for your site described in your AFHMP, when you open a waiting list. The recent FHEO guidance emphasizes that a site should advertise at least 60 days before any waitlist opening. According to the guidance, this will have a meaningful effect on reducing disparities.

Tenant selection plan. Your resident selection plan says how you’ll rank applicants on the waiting list, including any preferences you’ll give for, say, disability, extremely low-income level, or working families.

The recent FHEO guidance notes that the use of preferences in housing programs can significantly restrict access to housing opportunities in a discriminatory manner, especially when demand for housing is so high that persons without a preference have little to no chance of obtaining housing. Therefore, preferences should be carefully considered in light of existing patterns of residential segregation and past discriminatory practices. And preferences for residents of a geographic area like a city or county are permitted only with advance approval by HUD, and may not discriminate in violation of civil rights laws. Owners also must clearly inform all applicants about available preferences and must give applicants an opportunity to show that they qualify for available preferences. The use of preferences must not operate in a manner contrary to civil rights protections and also must be consistent with federal requirements applicable to the housing program.

Tip #3: Conduct Random Drawing to Rank Applications

The fairest way to rank applications for the waitlist, particularly if you expect to attract a crush of applicants, is to use a random drawing. According to FHEO guidance, placing applicants on a waitlist pursuant to lottery rather than by prioritizing those who are first to apply is more likely to yield a more diverse tenant body, particularly when there is very high demand for the property.

Under this random drawing approach, the waiting list isn’t established based on date and time of application. Instead, the site randomly orders applications to form its waiting list. If the site anticipates receiving far more applications than it can assist in a reasonable period of time, the lottery rules can be established in advance with a limit to the number of applications that will be placed on the waiting list. When the application deadline has passed, the site randomly selects the number of applications from a pool of all applications submitted. Those selected are randomly ordered on a waiting list. It’s a good idea to ask a third party, such as your site’s lawyer, accountant, or private firm, to conduct the drawing. Otherwise, you may open yourself up to claims of discrimination or favoritism. If you keep your list open after the drawing, you can add applicants to the bottom of the list on a first-come, first-served basis.

Tip #4: Allow for Choice of Contact When Updating Waitlist

The FHEO guidance points out that procedures for updating the waitlist and removing applicant names may disadvantage or exclude certain groups of persons in accessing a housing opportunity. For example, applicants experiencing housing insecurity or homelessness may have difficulty if a stable mailing address is required, rather than allowing for communication by phone or email.

When wait times are long, removing applicants from the waitlist if mail is returned as undeliverable without any other attempt to reach an applicant can disadvantage applicants who are transient due to housing insecurity. This is especially true as people rely increasingly on phone and email, even for more formal communication with government agencies, banks, etc. Allowing applicants, the choice of how they would like to be contacted, including by mail, email, phone, or all three is less likely to unjustifiably exclude applicants.