Need to Know!

Categories for Direct-to-Consumer Screening

December 29, 2015 11:56 am

Tenant Screening 101- Report Content

Tenant screening reports are a specialized type of “Consumer Report” as defined by the Fair Credit Reporting Act (FCRA). Tenant screening reports nearly always include: 1.  A consumer credit report – provided by one of the three national credit reporting agencies (Experian, Equifax and Transunion.  There was a time when some landlords opted for reports from all three bureaus – unnecessay today since most creditors report to all three. 2. An eviction search – a search of the public record for unlawful detainer claims against the applicant. 3.  A criminal records search – a search of the public record for evidence of criminal activity on the part of the applicant.  The criminal records search may also include a national sex offender registry search and the U.S. Treasury Department’s  Specially Designated Nations search (often referred to as an OFAC search). 4.  An Employment (income) verification – though landlords often rely on pay stubs these... View Article

November 19, 2015 6:44 am

Tenant Screening 101 – Legal & Regulatory Environment

Landlords and tenant screening companies face an increasingly hostile legal and regulatory environment.  There is a large and growing body of law governing the production and use of tenant screening reports – a specialized form of consumer reports. Vigorous enforcement of the Fair Credit Reporting Act (FCRA) by the Consumer Financial Protection Bureau (CFPB) – created by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) – has increased the risk associated with owning and managing rental properties. There is good news, however. By following a few simple rules – best practices – we can thoroughly vet prospective residents without becoming targets ourselves. Here’s how: Best Practices Develop your rental criteria before accepting applications to rent. Inform the applicant that a background check will be conducted as part of the leasing process.  Secure their authorization (in the form of a signature on an application containing the required disclosure and authorization language – as well as the name and contact information for the tenant screening company. Provide the... View Article

November 5, 2015 9:07 pm

Things to Consider before Applying for a Rental Home

There is a great deal written for landlords about screening prospective residents… much less written for applicants about screening prospective landlords.  So here goes. What is it you should consider before signing on the bottom line of a rental agreement. There are the obvious, of course: Is the property attractive & well maintained? Are there units (available) that meet your needs – bedrooms, bathrooms, appliances, etc? What amenities are included – exercise facilities, a pool, spa, etc? Is there adequate parking and access to transportation?   Less obvious but equally important, are the landlord’s “tenant screening” practices – notably their rental criteria. So what is rental “criteria” and why do you and I care? Rental criteria are the standards by which a landlord evaluates a prospective tenant – often a document outlining various thresholds the applicant must meet to be granted tenancy – as well as those things that will result in denial of the application. Criteria includes one or more of the... View Article

September 21, 2015 3:43 pm

Investigative Consumer Reports, To Be or Not To Be

The federal Fair Credit Reporting Act (FCRA) and its progeny in state law focus heavily but not exclusively on consumer credit reporting. After all, the Congress, in its findings in Section 602 the FCRA [15 U.S.C.§ 1681] begins with the statement that: “The banking system is dependent upon fair and accurate credit reporting. Inaccurate credit reports directly impair the efficiency of the banking system, and unfair credit reporting methods undermine the public confidence which is essential to the continued functioning of the banking system.” But Congress goes on to say: “An elaborate mechanism has been developed for investigating and evaluating the credit worthiness, credit standing, credit capacity, character, and general reputation of consumers… <and that> there is a need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy.” Consumer Reports are subsequently defined as “…any written, oral,... View Article

July 7, 2015 10:27 pm

Supreme Court, Disparate Impact & Tenant Screening

The Supreme Court of the United States (SCOTUS) delivered several important decisions in June of this year (2015).  One of those decisions has a direct impact on the rental housing industry – specifically, the tenant screening process. In Texas Department of Housing and Community Affairs(The Department) v. The Inclusive Communities Project, Inc.(ICP), the court held that business practices that (even if unintentionally) have a disproportionate (or disparate) impact on protected group can form the basis of a Fair Housing Act (FHA) claim.   The case went something like this: ICP alleged that The Department fostered “…segregated housing patterns by allocating too many tax credits to housing in predominantly black inner-city areas and too few in predominantly white suburban neighborhoods.” Relying on statistical evidence, the District Court decided in favor of plaintiff ICP, ruling that they succeeded in establishing that The Department’s allocation practices had a disparate impact based on race; and that while those practices met the business necessity test, The Department failed to show there were... View Article

May 29, 2015 9:17 pm

Tenant Screening – Importance of Access to Eviction Records

Many in the low income housing advocate community have pushed for legislation to limit access to eviction filings and dismissed case for tenant screening purposes. They argue that the practice is at best unfair and at worst, prejudicial – that many are dismissed due to lack of merit.  That has not been our experience. There is very little that is certain these days.  But one thing we can  count on is self-interest.  Filing merit-less eviction actions is absolutely contrary to the interest of the landlord.  Consider that: Evictions are time consuming! $$ Evictions negatively impact occupancy (rents)! $$$ Evictions are expensive – given legal fees and court costs!  $$$$ In fact, pursuing unlawful detainer actions to a decision is so expensive in time and treasure, that the majority of those filed are dismissed by the landlord when the resident pays or moves out. The risk of an occasional eviction is a fact of life for landlords – a risk of doing business.  We manage that... View Article

May 21, 2015 7:34 pm

The Unscorables – A Challenge for Landlords

The Consumer Financial Protection Bureau (CFPB) recently published a document entitled Data Point:  Credit Invisibles.  The purpose of the publication is “…to further the Bureau’s objective of providing an evidence-based perspective on consumer financial markets.” The focus of CFPB publication is that segment of the population with zero, very little or stale credit histories – who the CFPB describes as “credit invisibles” or “unscorables” and who  have great difficulty accessing credit markets. The Problem The challenges faced by credit invisible and unscorable consumers extends beyond access to credit – to other markets – including rental housing – as landlords have become increasingly reliant upon credit scores as part of their tenant screening process.  They do so because there is (presumably) a correlation between low scores and the likelihood of a failure to fulfill the terms of a rental agreement.  They do so as a way to remove subjectivity from the tenant screening process... View Article

April 15, 2015 11:33 pm

Portable Tenant Screening Reports – The Time Has Come!

Portable Tenant Screening Reports Paying multiple tenant screening fees before finding a landlord who will accept them is a significant hardship on low income applicants.  In extreme cases it can result in homelessness. Low income housing advocates have long sought a portable tenant screening report to address the problem – a single report (for a single tenant screening fee) that can be shared with multiple landlords. The Problem Under the traditional tenant screening model the landlord orders a tenant screening report from their tenant screening company.  The tenant screening company returns the report to the landlord.  The landlord decides whether to accept, accept conditionally (e.g. with an increased deposit or cosigner) or decline the applicant – based on their rental criteria.  The traditional model requires prior “certification” of the landlord by the tenant screening company – a costly and time consuming process. Traditional tenant screening reports are not portable – meaning the... View Article

March 18, 2015 12:01 am

Accuracy of Consumer Reporting…What’s the Fuss?!

The Fair Credit Reporting Act (FCRA) has long required that Consumer Reporting Agencies (CRA’s) and “furnishers” of consumer data exercise care in collecting, storing, and reselling consumer data. Section 607. Compliance procedures [15 U.S.C. § 1681e] (b) Accuracy of report.—Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates. Section 611. Procedure in case of disputed accuracy [15 U.S.C. § 1681i] (a)(1)(A) In general.— Subject to subsection (f), if the completeness or accuracy of any item of information contained in a consumer’s file at a consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly or indirectly through a reseller of such dispute, the agency shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current... View Article

January 13, 2015 5:42 pm

Portable Tenant Screening Reports – A Legislative Solution?

Year after year tenant advocates in the State of Washington push for a change to the RLTA that would require landlords to accept portable tenant screening reports OR not charge to run their own – to reduce the burden of multiple screening fees on low income applicants. Landlords argue that it is unfair to require them to accept reports that do not meet their specific requirements – that do not contain the required data (“elements”), that are compiled using substandard tools and processes (“methodology”), or that do not apply their specific “criteria” (to formulate recommendations). Advocates counter by attempting to define a “comprehensive report” – a report that, in theory, will satisfy the requirements of the majority of landlords.  Sounds good, but as with all things the devil is in the detail. Elements It is possible to define a tenant screening report that includes all the elements required by the... View Article