Need to Know!

Portable Tenant Screening Reports – A Legislative Solution?

January 13, 2015 5:42 pm

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 majority of landlords – by including virtually everything there is.  The list would look something like this:

  • A credit report & score
  • An SSN trace – as needed to establish the identity of the applicant
  • An eviction records search
  • A criminal records search
  • Employment verifications
  • Rental references
  • Recommendation

Methodology

It is also possible to define a methodology that delivers the quality (completeness and accuracy) that would meet the needs of the majority of landlords.  It might look like this:

  • Credit
    • Pulled from any one of the three national credit bureaus
    • Include a FICO score, Vantage Score 3.0 or similar
  • Public records (criminal & eviction) searches:
    • Include alias’– disclosed & undisclosed
    • Include additional addresses – disclosed & undisclosed
    • Confirm record matching – no false positives
  • Verification parameters that include:
    • Employment verifications
      • Confirm via credible source – e.g. HR
    • Rental verifications (references)
      • Confirm via credible source
      • Include undisclosed rental housing
      • Include references on dismissed eviction filings

Criteria (Recommendations)

Here’s the rub!!  Property management professionals require recommendations (based on their criteria) from their tenant screening company – as a way to control for the conflict that exists between tenant screening and leasing – and to mitigate the fair housing exposure.  Criteria can, should and often does vary down to the site level – even within a single portfolio.

So, while it may be feasible to deploy a tenant screening product that incorporates the elements and methodology required by the majority of landlords, it is not possible to deploy a single (or universal) criteria upon which to base all recommendations.  That leaves those who accept portable reports with two options:

  • Apply criteria themselves – a good solution of independent rental owners.
  • Centralize processing to control for the conflict of interest and fair housing exposures – a possible solution for larger organizations.

Bottom Line

There is little doubt that multiple screening fees are a hardship for low-income applicants.  There is little doubt that portable tenant screening reports will help reduce that burden – to the extent landlords accept them.  The question is… how do we get more landlords to accept them?  Do we attempt to force the issue through legislation or do we leverage market forces to persuade them to do so?

A legislative “solution” is problematic on multiple levels – beyond the ideological.  It relies on legal and regulatory action (versus the invisible hand – the relentlessness of market forces) to change behavior.  Secondly, it is unlikely to reduce the financial burden on low income applicants.  Those not yet persuaded will run their own reports and will recover the cost of doing so – one way or another.  No choice.  A modest rent increase comes to mind.

Further, the market is responding.  Moco Incorporated has developed and deployed a very complete and very high quality portable tenant screening report – under its MyScreeningReport.com® (MSR) brand.  MSR was borne out of collaboration with the Spokane Low Income Housing Consortium – who continues to vigorously promote the product within the landlord community.  MSR continues to do very well in that market as a result – demonstrating that promoting the idea can be effective.

Note that MSR is very popular among private landlords – who represent a large percentage of the rental housing market and often lack access to quality tenant screening products.

Applicants love the portable tenant screening model.  They especially appreciate its transparency.  There are legal and regulatory benefits for consumer reporting agencies and landlords.  One day, in the not too distant future, large numbers of well qualified applicants will present with portable reports.  Refusing to accept those reports will put the landlord at a competitive disadvantage.  That is when things will change.

Visit Moco Incorporated or MyScreeningReport.com® for more information regarding this timely and important topic.

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