New Crackdown Means Residential Operators Must Provide Better Renter Reports

The Biden Administration made another series of announcements in its quest to protect people who rent their homes.

In addition to plans for incentives to change local and state zoning and housing regulations to allow more housing to be built, there was extensive reference to existing regulations that cover the use of tenant screening reports, which “contain information such as a person’s credit characteristics, rental history, or criminal history,” as the Federal Trade Commission noted. That places the reports under the auspices and requirements of the Fair Credit Reporting Act.

In the case of an adverse action — for example, denying the application, requiring a co-signer, asking for a deposit that might not be required of another renter, or charging a higher amount of rent — you must provide the applicant or tenant a written, oral, or electronic notice. Oral notification is probably not wise as it becomes harder to prove that it occurred.

The notice has to include the source of the information, including name, address, and phone number; “a statement that the CRA that supplied the report did not make the decision to take the unfavorable action and can’t give specific reasons for it;” and a notice of the person’s right to dispute the accuracy or completeness of any information. This is necessary even if the report wasn’t the primary reason for the decision.

If you use a credit score, there’s more to be done. “You must give the applicant or tenant written or electronic notice that includes the credit score, a description of the score (its source, the date it was created, and the range of scores under that credit model), and the key factors that adversely affected the credit score, listed in the order of their importance based on their effect on the credit score,” the FTC writes.

These requirements aren’t new, but necessary, and consumers can take a complaint to the government if the steps aren’t followed. Another of the steps the White House plans is $10 million in new HUD funding for tenant outreach, so they know their rights.

HUD also plans new rulemaking “that would require that tenants of public housing and properties with project-based rental assistance receive a written notice at least 30 days prior to lease termination for nonpayment of rent.” And it has published new guidance for public housing authorities and multifamily housing owners participating in the Rental Assistance Demonstration on more extensive engagement requirements and enhanced oversight tools.

That brings everything to technology. An operator or owner will have to track all such reports requested, ensure nothing beyond allowable uses are enabled, and provide all those responses about adverse actions that may be due to many prospective renters. Databases and other workflow software would be good to implement, as many of the requirements have existed for decades.