Use New HUD Guidance to Keep Your Marketing, Application & Screening Compliant

We’ll give you six strategies you can implement to put the guidance principles into action.

 

If you ever get into fair housing trouble, there’s a pretty good chance it will be due to some disconnect in the way you market your property. Section 804(c) of the federal Fair Housing Act (FHA) establishes the baseline for compliance by making it illegal to “make, print, or publish, or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination based on race, color, religion, sex, handicap, familial status, or national origin.”

But simply avoiding the discriminatory activities that Section 804(c) bans may not be enough to ensure compliance. Providers of the more than 1.5 million HUD-subsidized multifamily units nationwide (including Project-Based Rental Assistance (PBRA), Section 202, and Section 811 subsidized housing) face the additional challenge of ensuring that their tenant mix is representative of the “market area” in which they operate in terms of race, color, and national origin.

While the requirements for non-HUD-assisted landlords are less stringent, following the guidance’s steps to avoid segregation, provide equal housing opportunity, and ensure a representative tenant mix also happens to be a best practice for managing liability risks under the FHA. This is particularly true for defeating potential claims for disparate impact discrimination.

Accordingly, the new guidance that HUD recently issued to help federally assisted landlords avoid discriminatory marketing and rental application processes can go a long way in bolstering your own compliance efforts. What makes the guidance of even greater value is that it translates HUD’s longstanding principles about discriminatory marketing and advertising to website and other digital media. It also provides new insight on how to identify and root out discrimination pitfalls in your rental application, screening, and waitlist management practices.

So, this month, the Coach will explain the new HUD guidance and how it relates to not only subsidized but also market-rate housing subject to FHA rules. Then, we’ll set out six strategies you can implement to put the guidance principles into action and keep your own marketing and rental application activities compliant. You can then take the Coach’s Quiz at the end of the lesson to apply the principles to real-life situations that you’re likely to confront in marketing and leasing your property.   

WHAT DOES THE LAW SAY?

Title VI of the Civil Rights Act of 1964 (the FHA is Title VIII) bans discrimination on the basis of race, color, and national origin in programs or activities receiving federal financial assistance. Banned practices include:

• Restricting in any way a person’s access to housing, services, or benefits;
• Affording persons an opportunity to participate in housing, services, or benefits different from that afforded to others;  
• Treating a person differently from others in determining if they meet eligibility criteria;
• Providing any housing, services, or benefits to a person differently than to others; and
• Utilizing criteria or methods of administration that have the effect of subjecting persons to discrimination or defeating or impairing the objectives of a funded program or activity.

Note that a landlord who engages in any of the above conduct would also likely be violating the FHA as well. Another point of overlap between Title VI and the FHA is the prohibition on what is called “discriminatory effects” discrimination, which occurs when a policy or practice that appears neutral on its face disproportionately and adversely affects members of a particular race, color, or national origin.

Example: Studies show that Blacks and Latinos are imprisoned at disproportionate rates, as compared to the general—and especially the white—population. So, a seemingly neutral policy of not renting to anybody with a criminal record may have the effect of excluding those groups.

The New HUD Guidance

“Many properties employ marketing, rental application processing, and waitlist management practices that limit access for eligible housing-seekers in the market areas” and “contribute to segregation of HUD-subsidized properties and disparate outcomes,” HUD warns. “For example, a white family living in a unit with PBRA is more than three times as likely to live in a low-poverty neighborhood as a Black family living in a PBRA unit.”

With this in mind, on April 21, 2022, the HUD Office of Fair Housing and Equal Opportunity (FHEO) issued “Guidance on Compliance with Title VI of the Civil Rights Act in Marketing and Application Processing at Subsidized Multifamily Properties” (the “Guidance”) to help Title VI housing providers steer clear of problematic practices.

6 STRATEGIES FOR COMPLIANCE

As noted above, the fair housing principles discussed in the Guidance also apply to market-rent properties. Aside from the parallels between Titles VI and the FHA, the Guidance is the most extensive public analysis of fair housing and marketing issues that HUD has issued since way back in 1989. Here’s a look at the six strategies landlords can deploy to ensure that their own marketing, application, and screening practices comply with the fair housing principles the Guidance explains.

Strategy #1: Market as Broadly as Possible

If racial, ethnic, or national origin groups are underrepresented at your community, as compared to their representation among qualified housing-seekers in your market area, it may be because your current marketing and outreach efforts aren’t broad enough, HUD suggests.

What You Shouldn’t Do: The Guidance lists examples of marketing practices that “may not equitably reach potential applicants across the market area”:

• Relying on word-of-mouth marketing without additional efforts to reach a broader applicant pool, which may exclude those not connected to your existing tenants’ family or social networks;
• Relying just on referrals from just one or a limited number of community organizations that serve limited or targeted populations, such as church groups; and
• Simply placing “for rent” signs at a property that applicants who don’t live near, visit, or pass by your community won’t see.  

What You Should Do: Landlords should try “to ensure that all racial groups in a marketing area have knowledge of an opportunity to rent units in a particular building,” according to the Guidance. In an accompanying Implementation Sheet (the “Sheet”) published on the same date as the Guidance, HUD lists marketing practices that landlords should consider to ensure compliance with Title VI, which would also represent best practices for complying with the FHA, especially in racially and ethnically diverse markets with high housing demand:  

• Advertising at least 60 days in advance of any waitlist opening, or periodically—for instance, at least once a year, if the waitlist is kept open for long periods of time;
• Distributing detailed flyers and blank applications, including digitally, to several local organizations across the market area with ties to a wide range of prospective applicants, such as foodbanks, legal aid offices, health clinics or medical facilities, employers, grocery stores and other businesses, local governmental offices, housing authorities, senior centers, recreation centers, libraries, schools, and places of worship;
• Placing ads with local radio stations, newspapers, and newsletters;
• Posting ads in public places like buses, trains, and billboards; and
• Including clear and consistent information about unit sizes, amenities, approximate rents, etc.

Strategy #2: Target LEP Persons

More than 25 million people in the U.S., about 9 percent of the national population, have limited ability to speak, understand, write, and read English. While fair housing laws don’t specifically list limited English proficiency (LEP) as a protected class, courts, HUD, and state fair housing authorities have made it clear that imposing language-based restrictions may constitute discrimination on the basis of race, religion, and/or national origin.

Example: On April 1, 2022, three weeks before HUD issued the Guidance, the U.S. Justice Department (DOJ) filed a Statement of Interest with a New York District Court pertaining to an FHA lawsuit against a landlord for refusing to rent to LEP applicants unless someone who speaks and reads English lives in the apartment. “Policies that exclude rental housing applicants because they do not speak English may violate the FHA,” according to the DOJ statement. The lawsuit also alleges that the landlord refused the applicants’ offers to bring their own interpreters to translate lease documents and assist with communications [CNY Fair Housing v. Swiss Village LLC, filed April 2022].

Note that the “E” in “LEP” is somewhat deceptive to the extent that language-based discrimination can involve preference for any language over another.

Example: In November 2009, a California community agreed to pay a record $2.725 million to settle allegations of discrimination against non-Korean-speaking residents and prospects in the Koreatown area of Los Angeles. Among other things, the complaint alleged that the community refused to rent to non-Korean prospects, misrepresented the availability of units to non-Korean prospects, and provided inferior treatment to non-Korean residents in those buildings [United States v. Sterling, November 2009].

What You Should Do: The Guidance suggests that Title VI landlords must not only refrain from excluding but also “take reasonable steps when marketing to ensure meaningful access for individuals with LEP.” HUD lists “reasonable steps” landlords can take to reach out to qualified LEP individuals in their market area, including:

• Advertising in non-English language newspapers, radio, and other media consumed by LEP people in the market area;
• Working with grassroots and faith-based community organizations and other stakeholders to inform LEP individuals of the recipients’ services;
• Using a telephone voicemail menu in the most common languages encountered;
• Distributing copies of applications and relevant application materials in languages commonly spoken by eligible LEP residents in the market area; and
• Affirmatively stating in common languages that language services are available to applicants and tenants.

The Sheet also suggests including the following disclaimer on translated leases and other legal documents for the LEP:

This document is a translation of a legal document. [Landlord] provides this translation to you merely as a convenience to assist in your understanding of your rights and obligations. The English language version of this document is the official, legal, controlling document. This translated document is not an official document.

Strategy #3: Maintain an Informative Website & Online Presence

In one of its rare ventures into the realm of websites and fair housing, HUD suggests that maintaining a web or mobile site with clear information about availability, eligibility, and application processes can be a low-cost way to inform potential applicants about housing opportunities at the site, particularly those who have difficulty calling or visiting during business hours. Web and mobile sites are especially important for larger properties with more frequent vacancies, such as those with more than 20 units. The same is true for posting on social media, local listservs, and other sites relevant to those looking for low-income housing in the community, including those most accessed by those who are least likely to apply.

What You Should Do: The Guidance then reiterates previous HUD recommendations regarding general marketing content in the context of website and social networking, such as being sure to:

• Market the property and amenities, not the residents who live or should want to live there;
• Guard against use of any words or phrases suggesting a preference for or against a particular group protected by fair housing laws, such as “perfect for singles,” which may suggest that families with children aren’t welcome;
• Be wary of posting maps and directions that may inadvertently express preferences via references to institutions or landmarks associated with certain racial, religious, ethnic, or other groups. Examples: Saying your community is within walking distance of:
  
  • A church (signal to Christians);
  • A Black development (signal to Blacks);
  • A development known for its history of excluding minorities (signal to whites); or
  • A community center dedicated to a particular nationality.

• Avoid posting photographs, drawings, or other graphics, such as pictures of tenants, employees, or other people to signal exclusiveness of race, color, religion, sex, handicap, familial status, or national origin;
• Ensure that any models you do use are “clearly definable as reasonably representing majority and minority groups in the metropolitan area, both sexes, and, when appropriate, families with children”; and
• Use the Equal Housing Opportunity logo or statement in online ads and on your website just as you would do in traditional advertising and other marketing materials to demonstrate your commitment to comply with fair housing law.

DEEP DIVE

Exceptions Where Ads May Express Preferences

While the law generally bans statements that express a preference based on a protected characteristic, there are a few exceptions, including:

• Roommates: Ads stating a preference for members of a particular sex as a roommate in a shared-living arrangement;
• Senior housing: Ads excluding children in communities that qualify under the “housing for older persons” exception, which applies if:
  
  • HUD has determined the housing is specifically designed for and occupied by elderly persons under a federal, state, or local government program; or
  • The housing is occupied solely by persons 62 or older;
  • It houses at least one person 55 or older in at least 80 percent of the occupied units, and adheres to a policy that demonstrates an intent to house persons who are 55 or older; and

• Accessible housing: Ads with information about the availability of accessible housing; and
• Affirmative advertising: Ads designed to attract persons to dwellings who would not ordinarily be expected to apply, when such efforts are part of an affirmative marketing program or undertaken to remedy the effects of prior discriminatory housing advertising or marketing.

Strategy #4: Make Your Application Process as Easy & Accessible as Possible

In addition to marketing, the Guidance explains how to avoid potentially discriminatory elements in your rental applications, screening, and waitlist processes. Application processes that are overly burdensome are the functional equivalent of denials for purposes of fair housing, the Guidance cautions. Ditto for making it difficult for would-be applicants to obtain “necessary and correct information concerning what they must do to become a tenant,” to the extent it discourages them from applying.

What You Shouldn’t Do: Examples of practices HUD says should be avoided:

• Requiring applications or preapplications to be picked up and/or submitted in person, which can act as a barrier, unjustifiably excluding potential applicants who can’t travel to the property; and
• Distributing and/or accepting applications or preapplications only during a narrow window of time, such as one day or a few hours over several days.

What You Should Do: The Guidance calls on landlords to implement “broader application distribution and acceptance requirements to reduce disparities and promote equitable housing opportunity,” taking advantage of digital communication when possible. Examples:

• Make applications available on your property’s website and mobile version of the website;
• Distribute applications to community contacts throughout the market area;
• Accept applications through a variety of methods, including in person, mail, web-based forms, and email;
• Allow applications to be picked up and dropped off outside of regular business hours, including evenings and weekends, ideally at multiple locations; and
• Distribute and accept applications for longer periods of time.

Strategy #5: Identify & Eliminate Potentially Discriminatory Screening Criteria

The Guidance warns that certain criminal records, credit, rental history, and other screening criteria that appear neutral on their face may have the effect of unjustifiably excluding individuals based on race, color, or national origin.   

What You Shouldn’t Do: Beware of criteria triggering automatic rejection of applicants because of certain negative information. Examples include excluding applicants solely on the basis of:  

• Arrest records; and/or
• Having been evicted or other negative information in their rental history.

What You Should Do: Consider each case on its own merits and figure out what actually happened. Repeating previous guidance on criminal records screening, HUD warns landlords not to rely on arrest records without considering the nature, severity, and recency of conviction records, as well as extenuating circumstances. Ensure that criminal records screening policies specify:

• The types of records being considered—for example, convictions not arrests;
• The specific types of crimes that are disqualifying;
• The lookback period—for example, convictions occurring within three years from the application date; and
• That evidence of mitigating circumstances or rehabilitation and requests for disability-related reasonable accommodations will be considered.

Don’t request or consider records of criminal activity or rental history that fall outside the scope of your stated policies. And ensure that any third-party tenant screening services you use conduct screenings in accordance with all your tenant selection policies.

Similarly, in evaluating rental history, landlords should consider the accuracy, nature, relevance, and recency of negative information rather than having any negative information trigger an automatic denial. For example, records from eviction cases that the tenant won or that were settled without either party admitting fault don’t necessarily demonstrate a poor tenant history, the Guidance cautions. Extenuating or mitigating circumstances may also apply, for example, where an eviction was due to unexpected medical or emergency expenses. Other recommended practices:

• Ensure that policies for screening tenants are made available to and contain enough detail for applicants to determine whether they’re likely to qualify; and
• Allow for alternative methods of proof, when possible, for applicants to establish residency or qualify for other selection preferences to accommodate persons living in housing insecurity who may not have physical addresses, reliable mail, leases, utility bills, or other documentation.

Strategy #6: Identify & Eliminate Potentially Discriminatory Waitlist Practices

Procedures for updating and removing applicant names from the waitlist and removing applicant names may “also disadvantage or exclude certain groups,” according to the Guidance. Thus, for example, requiring waitlist applicants to have a stable mailing address rather than allowing for phone or email communication may adversely impact applicants who are currently homeless or experiencing “housing insecurity.”  

What You Should Do: To guard against discriminatory waitlist practices, the Guidance recommends that landlords:

• Let applicants specify their preference—mail, email, or phone—for how they’d like to be contacted about their waitlist status and other developments relating to their applications; and
• Prioritize selection of waitlist applicants on a lottery rather than first-to-apply or other basis that affords an advantage to particular types of applicants.