Oct 05

There as been a lot of discussion on and off the ApartmentAssoc@YahooGroups.com regarding screening criteria, whether it is necessary to have a written criteria and should you provide that criteria to prospective tenants.

Fair housing is a complex set of laws.  Even if you absolutely follow the rules and their intentions you can find yourself “defending your life” so to speak.  Better the records and documentation, the better you will be able to ward off false allegations.

Here is our personal experience with HUD Fair Housing:

In December 2007 an applicant from NYC applied to rent from us. Her most  recent employment was with a NYC temp agency. Although she put on the application that she was moving to Milwaukee to seek work, she  had no proof of a job offer.  We also had no means of verifying her  prior rental history or checking for NY evictions.

If she could not prove she had the resources to pay the rent it probably would not work out.  We told her we could accept her only if she could provide an acceptable cosigner.  She came in with a cosigner from Chicago, which  was not acceptable as it is pretty hard to collect a judgment  from an out of  state person in WI courts. So she was rejected.

Fast forward a couple of months. We receive a certified letter from HUD. The rejected prospective tenant from NY was alleging that  we denied her due to her being Hispanic.

Well this would be an easy one, I mistakenly thought.

The office manager who rejected the application was born in PR.  45% of our  tenants are Hispanic.  61% of our employees were Hispanic.  My wife is Hispanic. Her  parents were living in Vega Bajo, PR at the time of the complaint. Our company has donated to the Latino Community Center and has been one of the sponsors of Milwaukee’s Fiesta Boricua.

Our reasons for rejection were legitamate and followed our written criteria: 1) No verifiable current source of income; 2) No verifiable recent rental history.

So at that point I’m not real concerned of the complaint going anywhere.  It was a slight nuisance to spend an hour or so reviewing the file  and drafting a response. But I am comfortable that our process would withstand the scrutiny of HUD or anyone else, even absent a Hispanic  staff and wife. We had a written application with her hand written responses that did not include any WI income sources. We also have  the cosigners application that clearly shows he did not live in WI.  Plus we provide our screening criteria to prospective tenants as an attachment to our applications.

Once the investigator looks over our documentation supporting our reason for rejecting the applicantion the complaint will be dismissed, I mistakenly thought.

We were able to prove to the satisfaction of the federal investigator that indeed 45% of our tenants are Hispanic as is 61% of our workforce, including the employee who rejected the app for lack of verifiable income.

The woman amended her complaint saying that we discriminated against her as a single mother.  Well we have lots of single mom tenants, which we were again able to prove.

End of story right? Wrong!

No, the complaint was then amended that she is a Hispanic single mom with two kids and “everybody knows Hispanics think Hispanic single moms are bad risks”  (her statement, not ours.  In fact the woman who ran the application was a Hispanic single mom) So now we had to show all the screening we’ve done exclusively on Hispanic single moms.

We mailed 220 pages of application copies, spent hours pulling old records and doing phone interviews with the investigator.  He was at our office half a day looking at applications and tenant records as well as interviewing employees.  That we have our tenant docs scanned and digitalized really made this a lot more manageable.

As the investigator looked at each app he questioned things like ‘Why did you run a credit report on this one, but not that one.’ Well the latter had 5 evictions on CCAP so we didn’t need the credit report to see they were an unacceptable risk.   ‘Why did you print out this CCAP case for your file, but not that case.’  Well the first case was an eviction, so we wanted it for our records.  The second case was a speeding ticket, which we really didn’t care about as we are renting houses not fast cars.

A constant theme throughout this was the investigator saying ‘I’d like to call you tomorrow with a settlement offer so we won’t need to go through this any more’ to which we constantly replied ‘We do not illegally discriminate, we have good records and therefore are not interested in any settlement offer.’  My position is I will spend twenty grand on attorneys  before I will allow us to be extorted out of $10 and have a discrimination blemish on our record.

Every app we have run is well documented, but a fair housing complaint was still troublesome.

After this experience I would not sleep at night if we were like so many other owners who rely on telephone prescreening or anything else that is not written, photocopied etc.  If you didn’t like the tenant’s income how would you prove how much  it was at the time if you didn’t have a photocopy of a pay stub or award letter?  If you didn’t copy the ID how do you prove you screened the right person.  He said Sam Johnson, you screened Sam Johnson and found a lot of bad stuff. When the fair housing complaint comes in from Sam Johnston (note the “t”) with a rental history as pure as the driven snow how do you prove yourself?

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