The Washington Report

On Tuesday, May 30, NAR responded to a Request for Information (RFI) from the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC) focused on tenant screening practices – specifically the use of background checks and fees associated with applying.  RFIs, unlike comment letters, are not in response to a proposed regulation, but rather are information-gathering tools to assist federal agencies in understanding certain industries or practices.  This RFI is part of a series coming out from various federal agencies targeted at rental-housing topics, the result of the White House’s Blueprint for a Tenant’s Bill of Rights released earlier this year.  In the lead-up to the Blueprint’s release, NAR, as part of a select group of real estate and housing provider groups, met several times with White House officials to provide expertise and perspectives on rental housing issues, and successfully stopped several potential rule proposals that would have had a detrimental impact on housing providers and the rental housing market generally.

In its response NAR stressed the utility and importance of conducting background checks on potential residents to ensure a safe and livable community for all residents.  In a recent survey of NAR members, NAR’s research team found that the most heavily-weighted information from a background check that could disqualify an applicant is violent or property-related crimes and evictions within the past five years.  Further, 84% of respondents to the survey stated that they inform potential applicants of what their screening criteria is ahead of time, so they know if something in their background check will disqualify them.  Finally, two-thirds of respondents reported that they have procedures in place to allow applicants to explain an issue on their background check or correct false information.    

NAR also highlighted its commitment to upholding fair housing laws and principles.  Recognizing that traditional background checks – criminal, eviction, and credit – may have disproportionately negative impacts on applicants from marginalized groups, NAR supports the CFPB’s existing regulations and requirements on their use and provides guidance to members on how they should be used.  NAR additionally highlighted its support for the use of alternative credit scoring models, which may take into account factors such as paying rent and utilities on time (something traditional credit scores do not), providing a more accurate picture of what type of renter an applicant will be. 

As the White House and federal agencies continue to conduct research into rental housing practices and issues, NAR will continue to respond and advocate for the rights of housing providers.