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.

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).