Application Denial

Fair Housing: Blanket Criminal Record Ban May Be Disparate Impact Racial Discrimination

 

Possessing a criminal record isn’t a protected class under the FHA. However, statistics show that a disproportionate number of African Americans are arrested and incarcerated in the U.S., as compared to white persons. As a result, a rental policy of excluding any person with a criminal record may constitute what’s called “disparate impact” discrimination against African Americans and nationalities with disproportionately high arrest and prosecution numbers. Six of the 84 cases in this year’s Scorecard included allegations of FHA discrimination on the basis of criminal record. Criminal record discrimination may also be banned under state or local fair housing laws.

     

    Situation: A Michigan landlord rejected an otherwise qualified African-American applicant after an online check revealed that he had been convicted of a felony in connection with a domestic disturbance four years earlier. While acknowledging the conviction, the applicant insisted that he was fully rehabilitated.

    Refusing Housing Vouchers Is Source of Income Discrimination

    On the national level, while landlords won roughly two of every three cases in 2023, the most significant fair housing case of the year was a landlord loss. It involved what is rapidly becoming a major source of fair housing litigation, namely, source of income discrimination, which occurs when a landlord excludes an applicant or tenant who has the money to pay rent because of where that money comes from.

        Although source of income isn’t a protected class under the FHA, the contention is that excluding recipients of child support, Section 8 vouchers, unemployment benefits, veterans benefits, etc., has a disparate and discriminatory impact on the disabled and people of certain races, national origins, etc., who disproportionately rely on these sources of income.

        Lesson #6: Seemingly Neutral Credit Score Requirements May Discriminate

         

        While enforcing legitimate and nondiscriminatory rental and community policies is allowed, an Oregon case serves as a reminder how policies that look neutral on their face may still be illegal if they have the effect of excluding people the FHA protects.  

        Situation: A landlord rejects a black prospect with a credit score of 680 because her husband’s credit score is below the community’s 600 minimum. After the prospect sends the landlord an eloquent letter complaining about the “inequitable” credit score policy and its impact on “marginalized communities,” the landlord reaches out and tries to negotiate an arrangement with her. But she never sees the email. Testers later gather evidence suggesting that the landlord applies the policy selectively to exclude minorities. And even though she never actually applies for a rental, the prospect sues for racial discrimination.

        You Make the Call: Did the landlord’s credit score minimum policy discriminate?

        Answer: Yes

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