Q&A Regarding Possible FHA Violations from Criminal Screening Policies

HUD’s Office of General Counsel (OGC) recently issued guidance addressing how refusing to rent or renew a lease based on an individual’s criminal history could violate the Fair Housing Act (FHA). Last year, in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc., the U.S. Supreme Court upheld “disparate impact” liability under the FHA. Under this theory, a housing provider violates the Fair Housing Act when the provider’s policy or practice has an unjustified discriminatory effect, even when the provider had no intent to discriminate.

The OGC guidance reiterates this type of liability. That is, because minorities are arrested and convicted in disproportionate numbers compared to the general population, the use of crime records to screen prospective tenants has a harsher impact on minorities and, as a result, may violate the FHA.

The OGC outlines the three steps used to analyze claims that a housing provider’s use of criminal history to deny housing results violates the Fair Housing Act. This analytical framework is different from the one used to evaluate claims of intentional discrimination.

First, an applicant must prove that the policy (tenant screening, for example) has a discriminatory effect by resulting in a disparate impact on a group because of their race or national origin. Second, the housing provider gets the opportunity to prove that the policy is justified because it’s necessary to achieve a substantial, legitimate, nondiscriminatory interest. In the third step, the applicant must prove that such interest could be served by another practice that has a less discriminatory effect.

The OGC points out that national statistics provide grounds for HUD to investigate complaints challenging criminal history policies. Nationally, racial and ethnic minorities face disproportionately high rates of arrest and incarceration. For example, in 2013, African Americans were arrested at a rate more than double their proportion of the general population. Moreover, in 2014, African Americans comprised approximately 36 percent of the total prison population in the United States, but only about 12 percent of the country’s total population. In other words, African Americans were incarcerated at a rate nearly three times their proportion of the general population. Hispanics were similarly incarcerated at a rate disproportionate to their share of the general population, with Hispanic individuals comprising approximately 22 percent of the prison population, but only about 17 percent of the total U.S. population.

In contrast, non-Hispanic whites comprised approximately 62 percent of the total U.S. population but only about 34 percent of the prison population in 2014. Across all age groups, the imprisonment rates for African-American males is almost six times greater than for white males, and for Hispanic males, it’s over twice that for non-Hispanic white males.

Ultimately, the OGC guidance concludes that arrest records cannot be justified as a screening device, because an arrest without a conviction doesn’t prove unlawful conduct. But conviction records are also suspect, according to OGC, especially when used with strict policies that exclude anyone ever convicted of a felony.

OGC urges owners to distinguish on the basis of the nature, severity, and “recency” of criminal conduct, and to make an “individualized assessment” of each applicant’s criminal history, including the age of the applicant when the crime was committed and subsequent criminal and tenant history. In other words, an owner must be able to show that its criminal screening policy accurately distinguishes between criminal conduct that indicates a demonstrable risk to the health and safety of residents or staff and criminal conduct that does not.

The new guidance also makes clear that, in HUD’s view, so-called “one-strike” policies or blanket bans that refuse admission to anyone with a felony conviction are likely to be deemed discriminatory, and that the use of criminal records for client screening is suspect generally, unless housing providers give individualized consideration of each applicant’s circumstances such as considering the nature, severity, and timing of prior criminal conduct.

Along with the OGC guidance, HUD recently issued guidance to address questions that were raised by Notice PIH 2015-9 and H 2015-10, which concerned the use of arrest records in housing decisions. The following are some of the answers that were provided.

Q Why is the fact of an arrest not itself a permissible basis for making a housing decision?  

A 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 does not 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.

Q Does Notice PIH 2015-19/H 2015-10 completely exclude the review of arrest records in housing decisions?

A No. Although the fact that an individual was arrested is not grounds to deny a housing opportunity, a record of an arrest might properly trigger an inquiry by a public housing authority (PHA) or owner into whether a person actually engaged in disqualifying criminal activity.

As part of such an inquiry, a PHA or 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.

Q If an individual has an arrest history, what kind of evidence of criminal activity is needed before disqualifying that person from housing assistance?

A In determining whether a person who was arrested for disqualifying criminal activity actually engaged in such activity, PHAs and 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. 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.

Q In considering evidence of a person’s criminal activity, what is the threshold that must be met before a PHA or owner may disqualify that person from housing assistance?

A Public housing and Section 8 applicants may not be denied admission or assistance based on the mere suspicion that they or a household member engaged in disqualifying criminal activity. There must be enough evidence to be able to reasonably conclude that the applicant engaged in criminal activity. Thus, the fact that an individual was arrested is not an adequate basis for disqualifying an applicant for admission or assistance.

When terminating assistance for participants of Section 8 tenant-based and moderate rehabilitation programs due to disqualifying criminal activity, HUD regulations specifically provide that disqualifying criminal activity by a tenant, other household member, or guest must be demonstrated by a “preponderance of the evidence.” In other words, when taking all the evidence together and considering its reliability or unreliability, it must be more likely than not that the person in question engaged in the disqualifying criminal activity. The same preponderance of the evidence standard applies to public housing evictions as well.

As a reminder, only in limited and specific cases of criminal activity do HUD statutes and regulations require denial of admission or termination of assistance (and in only two cases— where someone has been convicted of producing methamphetamine in federally assisted housing or must register as a lifetime sex offender—is someone permanently barred). In all other cases, PHAs and owners have discretion to consider any mitigating circumstances in making admission and eviction decisions.

Q If, during an applicant’s admissions screening process, the applicant is arrested for violent or other disqualifying criminal activity, must a PHA or owner wait until the arrest disposition to determine the applicant’s eligibility for housing?

A No. While it may be advisable to wait until the arrest disposition—especially if the disposition is imminent—PHAs and owners have discretion to go ahead and use the available evidence to make an eligibility determination according to the standards in the applicable written admissions policies of the PHA or owner.

Q Must a PHA or owner provide an applicant with notice and the opportunity to dispute the accuracy or relevance of a criminal record before denying admission on the basis of that record?

A Yes. Before a PHA denies admission to the public housing or Section 8 program on the basis of a criminal record, the PHA must notify the applicant of the proposed decision and provide the applicant and the subject of the record with a copy of the criminal record and an opportunity to dispute the accuracy and relevance of that record. In addition, public housing and Section 8 applicants have the right to request an informal review of the decision after their application has been denied.

Similarly, when owners make the decision to reject an applicant on the basis of a criminal record, the owner must provide the applicant with a written rejection notice. This notice must state the reason for the rejection, advise the applicant of his or her right to respond to the owner in writing or to request a meeting within 14 days to dispute the rejection, and advise that persons with disabilities have the right to request reasonable accommodations to participate in the informal hearing process [HUD Handbook 4350.3, par. 4–9(C)].