Landmark Civil Rights Decision

Federal Court Holds Tenant-Screening Services Must Comply with Fair Housing Act

On Monday, March 25, 2019 we received a landmark civil rights decision in our case against CoreLogic. In April of 2018 we filed suit with the National Housing Law Project alleging CrimSafe (CoreLogic’s tenant screening tool) discriminated on the basis of race, national origin, and disability in violation of the Fair Housing Act, after our client, a disabled Latino man with no criminal convictions was disqualified from moving in with his mother. The court rejected CoreLogic’s motion to dismiss, and held that because companies like CoreLogic functionally make rental admission decisions for landlords that use their services, they must make those decisions in accordance with fair housing requirements.  As automated decisions by third-party screening companies are rapidly becoming the norm, this ruling has significant implications for landlords, renters and the entire screening industry.

Over the past year, staff at the Center have worked on the Commission of Equity and Opportunity’s Re-Entry Task to propose legislation to reduce the barriers to housing encountered by individuals returning home from incarceration. Throughout this session in the Connecticut General Assembly the Center has advocated alongside the ACLU’s Smart Justice Campaign for legislative reforms to tenant screening processes. We are honored to contribute this decision to the greater cannon of civil rights work that is being done by so many Fair Housing advocates in Connecticut.

Please help us celebrate this victory at our Fair Housing Month reception at the Legislative Office Building on Wednesday, April 3rd, 5 pm -7pm in the first floor atrium. https://www.ctfairhousing.org/registerlob/

Read the full press release that includes links to our complaint and the court’s decision. CFHC v. Corelogic MTD March 2019

A Historic Fair Lending Settlement for Connecticut Residents

The Center is delighted to announce the settlement of the fair lending complaint against Liberty Bank. This historic settlement will bring more than $16 million dollars in access to credit, homeownership subsidies, and economic development loans into low and moderate income communities of color. Many of these communities have not had access to credit for home buying or for home repairs. Furthermore, small businesses have not had access to credit or capital to spur economic development in these communities. Included in the settlement, Liberty Bank will open a loan production office in a neighborhood that continues to be underserved by banking institutions.

We look forward to working with our partners in the communities that will be affected by this settlement to ensure its success. We applaud Liberty’s commitment of time, energy and resources to a wide range of programs that will help promote financial education, expand opportunities for access to credit, and financially support programs developed to revitalize the housing market in communities in Connecticut that have traditionally had difficulty accessing credit.

Our congratulations to Center staff, Attorney David Lavery and Fair Housing Specialist Maria Cuerda who worked the case. We are grateful for their commitment to pursuing fair lending practices across Connecticut in all communities regardless of race or national origin.

See coverage in today’s Hartford Courant 

Read the full press release here. Press Release Final – CFHC v Liberty Bank

Center & NCLC File Federal Lawsuit Accusing Liberty Bank of Redlining

The Connecticut Fair Housing Center and the National Consumer Law Center today filed a lawsuit in the U.S. District Court for the District of Connecticut against Liberty Bank, alleging that the bank has violated the Fair Housing Act by engaging in unlawful “redlining” of predominantly African-American and Latinx neighborhoods in the greater Hartford and New Haven metropolitan areas. “Redlining” is the discriminatory practice by banks or other financial institutions of denying or avoiding providing credit services to consumers because of the racial or ethnic demographics of their neighborhoods.

The Fair Housing Act prohibits financial institutions from discriminating on the basis of race and color in their mortgage lending practices. The complaint alleges that Liberty Bank has structured its residential mortgage lending business in such a way as to avoid serving the credit needs of Connecticut neighborhoods where a majority of residents are African-American and/or Latinx.

The bank’s alleged redlining practices include: excluding African-American and Latinx neighborhoods from the area it serves; intentionally locating branch offices and mortgage loan officers in only majority-white neighborhoods; and engaging in differential treatment of prospective loan applicants on the basis of race or ethnicity. An investigation by the Connecticut Fair Housing Center revealed that, going back to at least 2010, Liberty Bank has originated a significantly lower percentage of residential mortgage loans for properties in neighborhoods of color when compared with similar lenders.

“Redlining systematically denies people who live in neighborhoods of color access to homeownership, therefore denying them the opportunity to build wealth,” said Connecticut Fair Housing Center Executive Director Erin Kemple. “Unfortunately, fifty years after the passage of the Fair Housing Act, the practice continues. Liberty Bank is choosing to offer less assistance to communities of color in violation of the state and federal fair housing laws.”

“Liberty Bank’s practices and timing are particularly disturbing in light of the continuing impact of the Great Recession on households of color in Connecticut and around the nation,” said National Consumer Law Center Director of Litigation Stuart Rossman. “Latinx families lost 66 percent of their wealth and African American families lost 53 percent of their wealth compared to 16 percent loss of wealth for White families. Depriving equal access to mortgage credit exacerbates the continually growing racial economic gaps in our society and perpetuates the very segregation in our neighborhoods that the Fair Housing Act was meant to reduce, if
not eliminate.”

Click here for a copy of the complaint

 

Media coverage of this case:

Southington branch included in lawsuit alleging housing bias by Liberty Bank (Meriden Record-Journal, October 11, 2018)
Nonprofits File Federal Housing Lawsuit Against Liberty Bank (CTNewsJunkie, October 8, 2018)
CT Bank Sued for Alleged Discriminatory Mortgage Lending (National Law Review, October 9, 2018)
2 Consumer Groups Hit Conn. Bank With Redlining Suit (Law360, October 5, 2018)
Discrimination Against Customers Alleged in Liberty Bank Federal Suit (Connecticut Law Tribune, October 5, 2018)
Liberty Bank Accused of Racial Discrimination in Lending Practices (Hartford Courant, October 4, 2018)
Liberty Bank Accused of Racial Discrimination in Lending Practices (NY Daily News, October 4, 2018)
Lawsuit alleges discriminatory lending practices by Liberty Bank (Hartford Business Journal, October 4, 2018)

Center Files Federal Lawsuit Against National Tenant Screening Company

Arroyo v. CoreLogic seeks to establish precedent that screening companies must comply with Fair Housing Act

The Connecticut Fair Housing Center and the National Housing Law Project have filed a new lawsuit in the U.S. District Court for the District of Connecticut contending that CoreLogic Rental Property Solutions (“CoreLogic”) violates the Fair Housing Act by disproportionately disqualifying African-American and Latino applicants from securing housing based on discriminatory use of criminal records as rental criteria.Laptop with hands typing.

The lawsuit asserts that CoreLogic’s tenant screening tool denied a Connecticut mother’s request to move her disabled son into her apartment based on a record of a dismissed shoplifting arrest from 2014.  Although rental decisions have traditionally been made by housing providers, today many landlords contract with third-party tenant-screeners to make admission decisions for them.  This litigation seeks to ensure that CoreLogic and all tenant-screening companies who functionally make rental decisions on behalf of landlords make those decisions in accordance with fair housing requirements.

The chief plaintiff in the lawsuit is Carmen Arroyo, whose son Mikhail was injured in a July 2015 accident that left him unable to speak, walk, or care for himself.  After becoming his conservator, Carmen asked her landlord for permission to move Mikhail into her home.  But the “CrimSAFE” background report from CoreLogic stated that Mikhail had a “disqualifying [criminal] record,” denying him the opportunity to move in with his mother.

Given that Mikhail’s only “criminal record” was the dismissed charge from 2014 and that his recent disabilities rendered him incapable of posing a threat to anyone, Carmen might have been able to challenge the denial.  However, CoreLogic refused to provide the Arroyos a copy of the information it relied on to make the screening decision, information which they were entitled to receive under federal law.[1]  Nor did CoreLogic’s criminal background report provide any details about Mikhail’s underlying criminal history to the landlord—only a computer-generated notation that the application did not meet the landlord’s criteria.  Without this information, the Arroyos could not challenge Mikhail’s denial, so he remained in a nursing home for approximately a year longer than necessary.

The Fair Housing Act prohibits denying tenants on the basis of race, color, religion, sex, familial status, national origin, or disability including practices and policies that unnecessarily disproportionately exclude members of a protected class.

Between 70 million and 100 million Americans have criminal records. Multiple studies have shown that across the country, African-Americans and Latinos are arrested, convicted, and incarcerated at disproportionate rates, even though whites report engaging in criminal behaviors (such as drug offenses, which account for over half of federal incarcerations) at similar rates to non-whites. [2],[3],[4],[5] This means policies which restrict admission for applicants with criminal records disproportionately deny housing opportunities to people of color.[6]  The federal government recognized this when HUD issued a 2016 guidance for landlords on how to evaluate criminal histories in accordance with the law.

This means that only criminal records which suggest an applicant poses a genuine and ongoing threat to persons or property should result in denial.[7]  HUD’s guidance specifically advises not to deny admission based on dismissed arrests – like Mr. Arroyo’s – or through “blanket prohibitions” that exclude applicants with any kind of criminal record without regard to the nature of the offense, how long ago it occurred, intervening changed circumstances, and other relevant factors.[8]

Instead, admissions processes should generally consider criminal records on a case-by-case basis.[9]   Automated criminal background checks with computer-generated scores and decisions—like CoreLogic’s “CrimSAFE”—are ill-suited to perform individualized assessments of applicant criminal history.  Tenant-screening software is programmed to apply standard rental admission criteria to criminal records data appearing in an applicant’s background check; the software does not evaluate whether an offense bears a meaningful relationship to housing, whether changed circumstances may significantly reduce the likelihood of an offense being repeated, or the myriad other possible factors that may relate to a criminal history admission decision.

Even so, automated tenant-screening methods—including for criminal history—are rapidly becoming the norm in rental admission screening.  Landlords commonly rely on the screening company’s determination of suitability, often—as with Carmen Arroyo’s landlord—not even receiving the underlying background information they would need to evaluate applicants individually.  Allowing computers to effectively make rental decisions will inevitably produce unjust denials for applicants like the Arroyos, whose circumstances do not fit neatly into pre-programmed screening algorithms.

A housing provider who blindly follows a screening company’s denial recommendations and has no viable process for individualized review or reconsideration thus follows a discriminatory policy under the Fair Housing Act.[10]  But the Fair Housing Act does not only apply to housing providers – it also covers individuals and companies who provide services in connection with housing, such as tenant-screening reports.[11]  When a tenant-screening company markets a criminal background report that contains only a bare “accept” or “decline” determination, and does not make underlying criminal history information available to allow a landlord to make an individualized assessment of a rejected applicant, the screening company’s “recommendation” is tantamount to the actual admission decision.

And if a tenant-screening company is going to make the actual decisions about who is admitted to housing and who is denied, then it’s important for that company to make those decisions within fair housing constraints, just as we expect landlords to do.

Ms. Arroyo and the Center, together with the National Housing Law Project, have brought an action seeking to hold CoreLogic accountable for its role in unlawfully denying housing to Mikhail Arroyo based on a discriminatory criminal records policy, and for failing to provide the Arroyos a copy of the criminal background report as required by federal law. This litigation seeks to ensure that CoreLogic and all tenant-screening companies follow fair housing requirements when they functionally make rental decisions on behalf of landlords make those decisions in accordance with fair housing requirements.

To read the Complaint, click here.

For questions about this case, please contact Greg Kirschner, Legal Director, at greg@ctfairhousing.org or (860) 263-0724.

 

[1] See 15 U.S.C. § 1681g(a) (“Every consumer reporting agency shall, upon request … clearly and accurately disclose to the consumer:  (1) All information in the consumer’s file at the time of the request…”).

[2] See, e.g., Alexander, Michelle, The New Jim Crow: Mass Incarceration in the Age of Colorblindness (2010).

[3] See HUD, Office of General Counsel Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions, p. 2 (Apr. 4, 2016).

[4] Taxy, Sam, et al., “Drug Offenders in Federal Prison: Estimates of Characteristics Based on Linked Data,” p. 2 (Table 1), Bureau of Justice Statistics (2015).

[5] See HUD, Office of General Counsel Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions, p. 2 (Apr. 4, 2016).

[6] See HUD, Office of General Counsel Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions, p. 2 (Apr. 4, 2016).

[7] See HUD, Office of General Counsel Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions, p. 2 (Apr. 4, 2016).

[8] HUD, Office of General Counsel Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate-Related Transactions, p. 6 (Apr. 4, 2016).

[9] Id. at 7 (“Relevant individualized evidence might include: the facts or circumstances surrounding the criminal conduct; the age of the individual at the time of the conduct; evidence that the individual has maintained a good tenant history before and/or after the conviction or conduct; and evidence of rehabilitation efforts.”).

[10] See 24 C.F.R. § 100.500(b) (defining “legally sufficient justification”); see also HUD, Office of General Counsel Guidance on Application of Fair Housing Act Standards to the Use of Criminal Records by Providers of Housing and Real Estate Related Transactions, pp. 6-7 (Apr. 4, 2016).

[11] See 42 U.S.C. § 3604(a)(b) (unlawful “to discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race, color, religion, sex, familial status, or national origin”) (italics added).

Center Joins NFHA & Co-Plaintiffs in Lawsuit Alleging Housing Discrimination by Bank of America

Earlier this week, the Center joined the National Fair Housing Alliance (NFHA), 18 other fair housing organizations, and two Maryland homeowners in filing a lawsuit against Bank of America and Safeguard Properties Management alleging violations of the Fair Housing Act. The lawsuit accuses Bank of America and Safeguard Properties of failing to maintain bank-owned properties in communities of color to the same level as their properties in white areas, amounting to discriminatory treatment that is illegal under federal fair housing law.

A rotted wooden porch railing, with view of yard in background showing trash on the ground.

One of the Bank of America-owned homes in New Haven.

For example, 45% of BOA-owned properties in communities of color had major maintenance problems – such as unkempt lawns, pests and rodents, boarded-up windows, and trash in the yard – compared with just 11% of the bank’s properties in white neighborhoods.  Their neglect affects property values, health & safety in these communities.

The lawsuit is the result of a multi-year investigation by NFHA and fair housing agencies across the country, including the Center. Together, we investigated more than 1,600 Bank of America-owned homes in working- and middle-class white, African-American, and Latino neighborhoods in 37 metropolitan areas nationwide, including in Connecticut.

Lisa Rice, the CEO of the National Fair Housing Alliance, said, “Bank of America and Safeguard’s intentional failure to correct their discriminatory treatment in African American and Latino neighborhoods—the same communities hardest hit by the foreclosure crisis—is systemic racism. The purposeful neglect of bank-owned homes in communities of color devalues the properties and the lives of the families in the neighborhoods around them. The health and safety hazards created by these blighted bank-owned homes negatively affect the residents, especially the children, living nearby. We have asked Bank of America and Safeguard to provide the same standard of routine exterior maintenance and marketing for all of its bank-owned homes, regardless of the age, value, or racial composition of the neighborhood in which they are located.”

Other key findings from the investigation:

  • 64% of Bank of America properties in communities of color had trash or debris visible on the property, while only 31% of the bank’s properties in predominantly white neighborhoods had trash visible on the property.
  • 37% of Bank of America properties in communities of color had unsecured or broken doors, while only 16% of their properties in predominantly white neighborhoods had unsecured or broken doors.

Read the full details and view more photos from the investigation in NFHA’s press release. 

Read the Washington Post’s recent coverage of this case.

 

This post summarized and paraphrased a press release from the National Fair Housing Alliance.

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