There is a different kind of AI for landlords – Actual Information – and a caution for landlords on how to react to tenant information provided by background screening companies per the new HUD tenant screening requirements.
By Scot Aubrey
When it comes to artificial intelligence, it seems to be everywhere.
In fact, it probably knows you’re reading this article right now. But did you know it’s even trying to work its way into your life as a housing provider? Although it has some restrictions, we do believe in AI, just a different kind than you are thinking of right now. Rather than relying on artificial intelligence, we believe that the AI we provide will change the way you manage. That AI is “Actual Information,” and it is more important than ever that you use it in managing your properties.
Recent changes in the HUD regulations for housing providers will create new challenges for each of us in this industry. How we use the information provided by background-screening providers will be affected, and your need to understand how you interact with information provided from your background-screening provider has been elevated to a whole new level. Please consider the following items as you use “Actual Information” in your business.
Creating a Criteria
One of the areas that HUD is highlighting is the use of and creation of criteria for all of your potential tenants.
HUD warns against the use or application of certain criteria in determining who can move into one of your properties. They indicate that you as a housing provider are solely responsible for creating and enforcing your own criteria. It is recommended that you contact your attorney for any custom criteria creation.
Beware as you create your criteria to steer away from the many areas HUD indicates as being potentially discriminatory and only rely on “Actual Information” results as you measure against your final criteria.
Evictions
Per the new HUD guidelines, “tenant screening companies and housing providers should not rely on eviction records that are old, incomplete, irrelevant, or where a better measure of an applicant’s behavior is available.”
Does that sound vague or subjective to you?
The new HUD guidelines are both clear and unclear about eviction data and how you can use it as a housing provider. One of the things you should look for with your “Actual Information” regarding evictions are the circumstances surrounding any eviction. Factors like how long ago the eviction occurred and the reason for the eviction, if you can find one, are the two main items.
Also to consider per the HUD guidelines is the likelihood of an eviction occurring again. You must consider things like whether there was criminal activity surrounding the eviction, if the evicted person was a victim of a crime, or if the individual who was evicted was forced to commit a crime, causing the eviction.
In our opinion, this just made using eviction data harder.
Final Occupancy Determination
When you are ready to decide on who you will rent to, please keep in mind the following regarding the “Actual Information” provided by your screening company:
- Your screening company cannot provide a pass-or-fail decision.
- Your screening company cannot provide an accept-or-deny decision.
- A landlord has to take all the information provided by the screening company and decide about housing. The screening company can have no role in the housing decision.
- Your screening company cannot give a landlord a score, recommendation, or any influence (explicit or implicit) as to the relevance of any information about an applicant.
In essence, you are on your own.
In conclusion, by relying on the “Actual Information” provided by your background-screening company, you will be equipped to make the best decisions on how to manage your properties and onboard new tenants.
It would be beneficial to familiarize yourself with the new guidance from HUD by reviewing the “Guidance on Application of the Fair Housing Act to the Screening of Applicants for Rental Housing” as provided by the Office of Fair Housing and Equal Opportunity.
About the author:
Scot Aubrey is vice-president of Rent Perfect, a private investigator, and fellow landlord who manages short-term rentals. Subscribe to the weekly Rent Perfect Podcast to stay up to date on the latest industry news and for expert tips on how to manage your properties.
