Ask 4 Questions When Reviewing Your Criminal Screening Policy

July 15, 2021

Two recent HUD actions indicate that owners may need to review their site’s criminal screening policies for compliance. On June 25, HUD issued a new proposed rule to reinstate the discriminatory effects regulations put in place under the Obama administration in 2013. Under the 2013 rule, the discriminatory effects framework was straightforward: A policy that had a discriminatory effect on a protected class was unlawful if it didn’t serve a substantial, legitimate, nondiscriminatory interest or if a less discriminatory alternative could also serve that interest.

The 2020 rule later implemented by the Trump administration complicated discrimination claims by adding new pleading requirements, new proof requirements, and new defenses, all of which made it harder to establish that a policy violates the Fair Housing Act (FHA).

The most recent action by HUD was completed in accordance with a memorandum from President Biden to the secretary of HUD instructing the agency to redress the nation’s long history of discriminatory housing practices. “We must acknowledge that discrimination in housing continues today and that individuals, including people of color and those with disabilities, continue to be denied equal access to rental housing and homeownership,” said Secretary Marcia L. Fudge in a statement on restoring the discriminatory effects rule.

The proposed rule also follows recent guidance HUD has issued on criminal activity and housing. The discriminatory effects rule is often brought up when considering applicants with criminal records. This happens because minorities are arrested and convicted in disproportionate numbers compared to the general population. So the use of crime records to screen prospective tenants has a harsher impact on minorities and, as a result, may violate the FHA.

On June 23, Secretary Fudge issued a letter to affordable housing providers that established the Biden administration’s stand on second chances for formerly incarcerated persons and the importance of stable housing in their reentry into our communities. “No person should exit a prison or jail only to wind up on the streets.”

With the impending reinstatement of Obama era disparate impact rules and the renewed focus by the new administration on setting nondiscriminatory policies with regard to housing decisions and past criminal activity, we’ll go over some principles to evaluate your criminal screening policies.

4 QUESTIONS TO ASK

It may be that your seemingly neutral policy of not leasing to applicants with a prior criminal history could lead to disparate impact liability because of how that policy could adversely and disproportionately affect members of a protected class that generally have more arrests and convictions. Make sure your screening policy distinguishes between individuals who pose an unacceptable risk and those who don’t. Here are some questions to ask to make sure your policy can hold up against a disparate impact claim.

Does the site have a blanket ban for convictions or arrests?

Having a blanket ban for any and all convictions fails to differentiate between prior conduct that demonstrates a threat to a housing provider’s substantial, legitimate, nondiscriminatory interests and conduct that doesn’t.

In fact, only in limited and specific cases of criminal activity do HUD statutes and regulations require denial of admission or termination of assistance. HUD requires denying admission where the applicant:

  • Has been convicted of producing methamphetamine in federally assisted housing; or
  • Must register as a lifetime sex offender.

In all other cases, owners have discretion to consider any mitigating circumstances in making admission and eviction decisions.

Some sites exclude anyone with arrests on their record. This is unjustifiable as an arrest record is not proof of criminal conduct. The best evidence of a person’s involvement in criminal activity is an official record of the person’s conviction in a court of law for disqualifying criminal activity. The fact that someone was arrested means only that the person was suspected of having committed an offense. Further investigation may have shown that no criminal activity actually occurred, or that the arrested individual did not in fact commit an offense. Consequently, the fact of the arrest itself doesn’t prove that a person engaged in disqualifying criminal activity, poses a threat, or has otherwise violated admission standards or lease terms relating to criminal activity.

Does your policy result in a case-by-case assessment of an applicant’s records?

You should conduct individualized assessments for applicants whose convictions require further review. It could be that the crimes your screening policy looks for is overly broad and are not actually related to the health and well-being of your community. Your policy should also consider the severity of the offense and how long ago it occurred.

Generally, HUD considers criminal activity around substance abuse and physical violence to be related to the health and well-being of the community. For assisted site owners, HUD’s one-strike rule has both mandatory and optional criteria for screening out applicants based on drug-related and other criminal activity. Under the mandatory screening criteria, HUD’s rule requires you to screen out applicants with histories of illegal drug use or who are registered sex offenders. Specifically, you must deny admission to an applicant household if:

  • Any household member has been evicted from a federally assisted site for drug-related criminal activity within the past three years [HUD Handbook 4350.3, par. 4-7(C)(2)(a)];
  • Any household member is currently engaging in illegal drug use [HUD Handbook 4350.3, par. 4-7(C)(2)(b)];
  • You determine that there’s “reasonable cause to believe that a household member’s illegal use or a pattern of illegal use of a drug may interfere with the health, safety, or right to peaceful enjoyment of the premises by other residents” [HUD Handbook 4350.3, par. 4-7(C)(2)(b)];
  • You determine that there’s “reasonable cause to believe that a household member’s abuse or pattern of abuse of alcohol interferes with the health, safety, or right to peaceful enjoyment of the premises by other residents” [HUD Handbook 4350.3, par. 4-7(C)(2)(d)]; or
  • Any household member is subject to a lifetime registration requirement under a state sex offender registration program [HUD Handbook 4350.3, par. 4-7(C)(2)(c)].

The rule also lets you adopt optional screening criteria. Specifically, you may reject a household if, during a reasonable time before the date of the admission decision, a household member “is currently engaging in, or has engaged in”:

  • Drug-related criminal activity [HUD Handbook 4350.3, par. 4-7(C)(3)(a)];
  • Violent criminal activity [HUD Handbook 4350.3, par. 4-7(C)(3)(b)]; or
  • Other criminal activity that would threaten other residents’—or site employees’, contractors’, or agents’—health or safety or their right to peaceful enjoyment of the premises [HUD Handbook 4350.3, par. 4-7(C)(3)(c)].

It’s up to you to decide what crimes warrant rejection. But once you decide, you must add those criteria to your resident selection plan and apply them consistently, all while considering the severity of the offense or how long ago it occurred.

In addition, a case-by-case assessment of an applicant’s arrest history may require a deeper look. HUD says that while the fact that an individual was arrested isn’t grounds to deny a housing opportunity, a record of an arrest might properly trigger further inquiry by the owner into whether a person actually engaged in disqualifying criminal activity. As part of such an inquiry, an owner may continue to obtain and review the police report, record of disposition of any criminal charges, and other evidence associated with the arrest to inform its eligibility determination.

According to HUD, in determining whether a person who was arrested for disqualifying criminal activity actually engaged in such activity, owners may consider, among other things:

  • Police reports that detail the circumstances of the arrest;
  • Statements made by witnesses or by the applicant or tenant that are not part of the police report;
  • Whether formal criminal charges were filed;
  • Whether any charges were ultimately withdrawn, abandoned, dismissed, or resulted in an acquittal; and
  • Any other evidence relevant to whether the applicant or tenant engaged in the disqualifying criminal activity.

Does your policy have a clear “lookback” period that’s not overly long and allows for the crime’s relevance to diminish over time?

One key factor is how much time has passed. The more recent the conviction, the greater the justification for considering the person who committed it as posing a risk of danger to safety and property. Based on court cases, the unofficial guideline is seven years. The exception involves sexual assault convictions, which don’t have a shelf life. In other words, sexual assault convictions may be grounds for denying an applicant housing regardless of how long ago they occurred.

Does your site’s policy take mitigating factors into consideration?

If your site’s background check reveals an applicant’s criminal history, along with evaluating the nature of the crime, your policy should allow consideration of mitigating factors. This shows that your process includes a case-by-case assessment that takes into account why an applicant has a criminal record, such as the circumstances surrounding the criminal conduct; evidence that the individual has maintained a good tenant history before or after the conviction or conduct; and evidence of rehabilitation efforts.

To provide evidence of mitigating factors, an applicant may provide the following:

  • Letter from parole or probation officer;
  • Letter from caseworker, therapist, or counselor;
  • Certification of various treatments/rehab programs;
  • Letter from family members who know the individual well;
  • Letter from employer, teacher, etc.;
  • Certification of any training or education completed;
  • Proof of employment; and
  • Statement of applicant.

 

HUD Secretary Fudge’s Letter Addressing Reentry Housing Needs

In a letter sent to affordable housing providers, Secretary Fudge outlined steps that HUD is taking to improve access to housing for those people leaving prisons and jails and returning to society and those with criminal records. The letter noted that people who lack stable housing following incarceration face a higher likelihood of rearrest and reincarceration. And on the other hand, a stable home can serve as the foundation upon which returning citizens can rebuild their lives, obtain employment, improve their health, and achieve recovery.

“Many people face housing denials based on their criminal records years or decades after serving their time, even when their criminal history does not indicate that they present a substantial risk to persons or property,” Fudge stated.

Secretary Fudge cited the American Rescue Plan as providing a near-term opportunity to assist people exiting prisons or jails through the nearly 70,000 emergency housing vouchers recently awarded to more than 600 PHAs across the country. HUD Notice PIH 2021-15 makes clear that people exiting prisons and jails who are at risk of homelessness due to their low incomes and lack of sufficient resources or social supports are eligible for these vouchers.

The letter outlines additional steps to meet the housing needs of returning citizens and to reduce barriers to housing among people with criminal records. These steps include:

  • Developing additional tools and guidance to assist private owners, PHAs, and Multifamily housing owners to ensure that their applicant screening and tenant selection practices avoid unnecessarily overbroad denial of housing to applicants on the basis of criminal records that could lead to Fair Housing Act violations, consistent with the 2016 memo on disparate impact and criminal records;
  • Reviewing existing HUD policies and regulations that limit access to housing and HUD assistance among people with criminal conviction histories; and
  • Publishing findings regarding best and promising practices on reentry housing, including through HUD’s existing programs and demonstrations like the Juvenile Reentry Assistance Program and the Pay for Success Permanent Supportive Housing Demonstration.

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