HUD Guidance on Use of Criminal Records by Housing Providers

 

Last week, HUD delivered a 10 page guidance on on the Use of Criminal Records by Housing Providers.  This is the latest in a long line of Guidance activity by Secretary Castro and his predecessors originating with the Fair Housing Act of 1968.  Listed as Title VII of the Civil Rights Act of 1968 42 U.S.C. 3601-3619; it enacted statutory prohibitions of discrimination in housing to any person based on race, color, religion, sex or national origin the Americans with Disabilities act of 1988 / 1990, added disabilities to the list of protected classes.

 

If you remember or have studied the political climate of the 1960’s, you may recall that the Civil Rights Act of 1964 was constructed amidst the turmoil and transition of its time resulting in vast changes that affected the lives of everyone.  While some may have felt the 1964 Act was a far reach, it had little impact to most in comparison to the Fair Housing Act a mere 4 years later.  Why?  Because discrimination issues now became a home-front issue.  For example; before the Act mortgage notes could be written to exclude the sale of a home to a minority.  Yes, discrimination was actually institutionalized into the documents themselves.  While many other examples exist, lets continue with additional movements that created our current day state.

 

Presently, we are in an environment where the 1971 War on Drugs and The Three Strikes sentencing laws have resulted in polarized opinions of their intent and results.  Some claim the result of providing a safer workplace and community is directly attributed to these types of laws by taking the offenders off the street that habitually resort to crime and destroy lives through drug abuse and violence.  Others feel the issue more personal, such as treating addiction as a disease instead of a crime; or a 3rd strike resulting in a life sentence where the offense was stealing $30 of candy.  The removal of Judicial discretion written in these laws create such sentencing.

 

Statistically, the probability of incarceration leans heavily toward ethnic minorities.  Are these groups the most criminally minded or more frequently targeted?  We will simply demonstrate the variance here:

 

  • Male minorities are incarcerated at 4x the average of all demographics.  However, at a collective 26% of the US population, the weighted average for minorities climbs to nearly 16x the probability of incarceration.
  • While Female minorities share an increasingly equal distribution as a result of the recent decline in black female incarceration rates; the population distribution still paces a 4x higher likelihood of incarceration on those same minorities.

Now; at current day, HUD Secretary Julian Castro is expanding the SCOTUS decision on Disparate Impact dated June 25, 2015 with the HUD Guidance announced last week.  The SCOTUS decision was seen as a tempered victory in the following details:

 

 

  • Liability may be established without intentional discrimination if the business practice is not founded on sound business considerations and those practices result in a disproportionate effect on identified groups (as identified in Title VII and ADA).
  • Racial balance alone is not applicable for this consideration.
  • Plaintiffs carries burden of establishing a “robust” connection in the actual practice compared to the claimed results.
  • Warnings of over-reaching that would “undermine its own purpose as well as the free-market system” and that overuse “would almost inexorably lead governmental or private entities to us numerical quotas” in housing decisions.
  • Defendant protection in creating a causal relationship between the policy and impact of the disparity.  (Ex:  Inner City subsidized housing may be utilized by a different demographic then a suburban development).
  • SCOTUS advised lower courts to “avoid interpreting disparate-impact liability to be so expansive as to inject racial considerations” into their decisions.

 

Tempered decisions like this one by the nations highest court demonstrate the intention to apply disparate impact cases on those truly deserving of that designation.  Plaintiff Council is frequently accused of over-reach, Defendant Council may be quick to request dismissal.  In either situation, critical factors seen by all federal district courts should be taken into consideration before causation is established.

 

One of those factors is the recidivism rate.    According to the National Institute of Justice, this is a complex statistical aspect of the criminal justice system and a core examination of Criminal Justice System Reform.   The Fair Credit Reporting Act  prohibits the use of non-conviction records if those records (arrests) originated greater than 7 years prior to the report date.  Some states have enacted lesser look-back dates.

 

However, those in the system represent a significantly high ratio of all re-arrests.  In connection with recidivism rates, the Congressional authors may be on track as seen in those released up to 3 years ago having a 67% rearrest rate and those up to 5 years carry a 76% rearrest rate.  While sex offenders are not likely to re offend in any other category such as theft, drugs etc; they represent an overwhelming majority of new sex offense arrests.  Recidivism rates for rapists top 25%, while child molesters reach a 35% recidivism rate.

 

As a result, SCOTUS has acknowledged disparate impact but seriously warns against frivolous claims, HUD has issued a new Guidance (below) to assist Property Managers on how to use criminal records, and location & community demographics are critically important in setting a criminal use policy for tenancy.

 

HUD Guidance on Use of Criminal Records by Housing Providers

 

The heart of this matter and many other Agency, Regulatory or Legislative initiatives is to address Criminal Justice Reform.  African-American incarceration rates represent 36% of the prison population while only 12% of the population.  Efforts to remove exclusions to tenancy based on criminal records within the Guidance include:

 

  • Arrests not resulting in a conviction.
  • Blanket prohibition for a conviction.
  • Rental criteria must serve a “substantial, legitimate, nondiscriminatory interest”.
  • Rental criteria “distinguishes between criminal conduct that indicates a demonstrable risk to resident safety and/or property and criminal conduct that does not”.
  • Policies that fail to take the convictions severity or nature into consideration (ex: Felony v Misdemeanor).
  • Length of time since conviction.  (See FCRA, state laws and recidivism rates for some additional detail).
  • This one may be an issue based on prior HUD regulations.  It closely follows employment considerations, however…..Criminal restriction standards must be applied on a case-by-case basis.  This begs the question of which policy to follow…..individual assessment vs consistency.
  • Allows (based on §3607(b)(7)) denial for convictions of drug manufacturing or distribution.
  • Obvious/overt discrimination of Title VII (X group need not apply policies).

HUD’s General Council, Helen Kanovsky states “While the Act does not prohibit housing providers from appropriately considering criminal history information when making housing decisions,arbitrary and over broad criminal history related bans are likely to lack a legally sufficient justification. Thus, a discriminatory effect resulting from a policy or practice that denies housing to anyone with a prior arrest or any kind of criminal conviction cannot be justified, and therefore such a practice would violate the Fair Housing Act.”

 

If you have any questions, please contact us today at 336-346-3095 or email here.  Resolve Partners is a leading provider of background checks throughout the United States.  Our years of experience and compliance; along with expertise in understanding of applicable law allows us to assist Clients in their efforts to fulfill business needs within the confines of these regulatory and legislative requirements.

 

Mike Dolianitis

Chief Compliance Officer

FCRA Advanced Certification