July 2024 Coach's Quiz

COACH’S ANSWERS & EXPLANATIONS

QUESTION #1

Correct answer: b

Reason: Best Practices #6 and #9 apply here

Best Practice #6: Beware of Basing Denials on Eviction History

Best Practice #9: Verify Denial Recommendations Against Your Own Criteria

The potential for discrimination coupled with the lack of transparency over how AI-based screening programs decide which rental applicants to recommend and reject make it risky to rely on a denial recommendation at face value. Accordingly, the Guidance calls on landlords to do an independent determination of whether a rejected applicant actually does meet the landlord’s own rental criteria. If so, the landlord should disregard the denial recommendation and accept the applicant. And, as we’ll explain below, this situation is one where the recommendation to deny should be disregarded. So, b. is the right answer.

Wrong answers explained:

a. is wrong and brings into play the second part of the analysis. The key is to recognize that the screening company’s denial recommendation because the applicant was sued for eviction for being a domestic violence victim runs afoul of the Guidance. First, the Guidance recommends disregarding evictions where, as is the case in this situation, the landlord ultimately dropped the case; second, because the victims of domestic violence are disproportionately women, evicting a tenant who did nothing wrong simply because she was the target of domestic violence is potentially a form of indirect sex discrimination.

c. is wrong even though the applicant would certainly have compelling mitigating evidence for challenging her domestic violence “eviction” in this case. But HUD is saying that landlords shouldn’t reject applicants that they conclude are actually qualified. Thus, the landlord in this case should disregard the screening company’s denial recommendation and not send a denial notice in the first place.

d. is wrong because making tenants pay higher rent or security deposits because they’re a domestic violence risk may be a form of indirect discrimination against women and other minorities who experience domestic violence at disproportionate rates (see “Dealing with Domestic Violence: How to Avoid Fair Housing and Other Legal Traps,” Fair Housing Coach, October 2021).

QUESTION #2

Correct answer: d

Reason: Best Practices #2, #7, & #8 apply here:

Best Practice #2: Ensure Use of Proper Screening Criteria

Best Practice #7: Beware of Basing Denials on Criminal History

Best Practice #8: Ensure Screening Company Sticks to Your Screening Policy

Based on previous HUD guidance and court rulings, we know that denying applicants on the basis of arrest records is a form of overbroad criminal records screening that raises FHA red flags. We also know from the new Guidance that both the landlord and screening company would both be potentially liable for an FHA violation in this case. This is true even if the discrimination resulted from an AI functionality, rather than a deliberate attempt to exclude. So, d. is the right answer.

Wrong answers explained:

a. is wrong because a landlord is liable for the discriminatory rental decisions it makes, even if it has no intent to discriminate and has nondiscriminatory rental policies. The fact that the landlord relied on a screening report generated by a third-party screening company is no defense. As the Guidance notes, “under principles of direct liability, housing providers are responsible for ensuring their rental decisions comply with the FHA even if they have largely outsourced the task” in which the discrimination takes place. The only reason a. is the wrong answer is that the screening company could also be liable.

b. is also a correct statement but the wrong answer. “Tenant screening companies can be held liable for discriminatory decisions caused by their practices,” the Guidance explains, citing two court cases (one from Massachusetts and the other from Connecticut) ruling against a screening company.

c.—neither—is the opposite of the right answer because potential liability extends to both the landlord and tenant screening company.