Topic: Applicant Rental History Verification

Just curious...

Does your company include verification of rental (or mortgage) history as part of its rental qualification process?

If yes:

What kind of information do you require?

How do you verify the information (computer system, screening company, fax verification, etc.)?

How long do you go back?

Specifically, what would cause an applicant to be declined?

If your screening company (SafeRent, LeasingDesk, etc.) approved the applicant without any conditions is this verification necessary? Would you decline someone that was otherwise approved if they couldn't provide satisfactory information?

If no, why not?

Sorry for the long list. I'm trying to get some feedback about the subject.

I appreciate your feedback!

This is my first reply on the site, hope you like :)!!

We require verification as a part of our rental qualifications.

I require information regarding Move-in and out dates, complaints, NSF's, late payments, if notice was given, and much more. The previous property managers or owners must verify all of the information given. The most important question on my forms asks if the tenant is eligible for leasing again in the future. Giving someone a few blank lines to explain yes or no does wonders.

I verify with the previous property management company and with an online screening company.

I generally go back to the past two residences of the applicant.

We have a strict policy regarding approval with bad rental references. If an applicant has ever broken a lease, been evicted, or sued for rent or property damages, then they are declined.

The approval is necessary regardless if the applicant is approved. Checking someone’s’ background on paper cannot compare to what someone who has dealt with the person firsthand can tell you. though each person is judged on a case by case basis, I would not automatically decline someone who could not provide all the necessary background verifications to my leasing desk. I am happy to say I do have faith in our screening process online and it would not be necessary.

Well I hope all of this makes since and is helpful. Sorry if it is short and jumbled, I am working hard now and am back and forth to my desk lol!

This is a great reply Ashley. You are right an applicant can look great on paper then completely different with references. Residents who leave owing a property manager money will most likely leave your property money as well.

Ashley Holt wrote:

I generally go back to the past two residences of the applicant.

We have a strict policy regarding approval with bad rental references. If an applicant has ever broken a lease, been evicted, or sued for rent or property damages, then they are declined.

If you use a service, like CreditRetriever, isn't doing residential verifications somewhat redundant?

If CreditRetriever finds an eviction in public records (or a prior landlord tells you the applicant was taken to court); but the applicant can show the judgement was paid (or no judgement was awarded), what do you do?

We do our credit screening in house. Using an online service, although fast, doesn't give you the whole picture. Rental references give you information that a credit report will not show. How many times were they late? Were they a disruptive resident? (and had many lease violations). Would you rent to them again? Sure a credit report can show whether someone skipped out owing a balance but there's a time delay. There's always a window where someone can apply owing a balance but because it hasn't been sent to the credit bureau we don't know about it yet. (They are getting ready to skip).

Although they can slow the credit process down resident verifications are invaluable.

"If you use a service, like CreditRetriever, isn't doing residential verifications somewhat redundant?

If CreditRetriever finds an eviction in public records (or a prior landlord tells you the applicant was taken to court); but the applicant can show the judgement was paid (or no judgement was awarded), what do you do?"

Generally, any residential verification I complete will not show me anything different that what my service finds. Yet, I will occasionally receive word of damages or an eviction that have not been filed or processed at the time. I may even discover that the previous management company decided to cut their losses and not charge the tenants for damages that they are sure they would never have compensation for. So occasionally, I do find something unexpected with a simple fax to another office, but I can usually depend on our screening process to give me accurate information.
LOL, the redundancy of checking backgrounds personally and comparing to my results, just to find that they are the same… it does get old!
:) :)

Ashley Holt wrote:

Generally, any residential verification I complete will not show me anything different that what my service finds.

Really? That hasn't been our experience. What service do you use?

I understand that there may be gaps between what shows up on credit reports and what current landlords may say. A request for reference from you can indeed signal the current landlord your intent to leave (whether it is at the end of the lease or not). This would not be good for the applicant who may be looking to skip before legal action is filed.


Now let's give an example of what a previous landlord might say about a former resident:

Landlord had to file for eviction in 2002, and was awarded a money judgement. If the applicant has paid the judgement or not, it may also appear in public records. Let's say it appears in public records, but applicant can prove it HAS BEEN PAID. What do you do?

This is a good discussion. Multifamily is in a precarious position since the beginning of this recession - there are a large number of newly foreclosed people flooding the market. Yet, we want renters because we have vacancies. So many property management companies have found out the hard way that someone who didn't take a 15 or 30 year commitment seriously, failing to read the paperwork and what was required, isn't going to have much problem violating a measly 12 month lease. Accurate and THOROUGH verification has become all the more necessary. But it has also become all the more easy. Do any of you remember those fax request forms we had to fill out in detail, and then waiting next to the fax for the return cryptic “OK”? The internet and competition has made this process easier and quicker.

It is also important to verify criminal history. Many of us are operating crime-free properties, yet we don’t verify whether our new tenant has the same basic idea. A thorough and complete background check is your only defense.

Here is the problem with residential histories. There was a report on LAST week's (not LAST night) '60 Minutes' that talked about the number of people across the country who are literally underwater on their homes (meaning they owe more $ on the loan than their home is worth); and are deciding to simply walk away and hand over the keys to the thieves who hold the notes; because they refuse to renegotiate the terms of the loan. This decision is not being taken lightly by many, and is usually followed by a bankruptcy filing; but not before getting approved as a resident.

As far as criminal background checks are concerned; do you have specific guidelines as to what kinds of offenses would cause you to deny an application? What do you do if you discover an applicant is registered as a sex offender (or is required to)?

I almost entirely agree with you, Johnny. While I am firm believer in the idea that a bank has no need to lower the balance owed, just as you wouldn't lower the rent amount in an active lease just because the people could no longer afford it, I agree with you that a credit/criminal isn't all that is needed. When you have a prospect who is transitioning from home ownership, you need a statement from the bank that all payments were made timely and that they have paid, or expect to pay off, the note.

Nobody forces a person to buy a home they can't afford, there are no guarantees when anyone makes an investment. Sometimes they go in the crapper. But these folks shouldn't become you or your community's burden either.

As for the secondary question, there are definitely bigger issues on a criminal report than others. For instance, if someone has had a DUI, I don't consider that reason not to rent. While a major issue and certainly not to be taken lightly, it doesn't impact their ability to pay me. If they had a theft conviction or especially anything drug related (possession, intent to distribute) that is automatically a no. It just has to be clear and in writing to avoid any fair housing or other complaints.

Here is the thing; I am willing to BET that there are so many people that are underwater on their homes, we are getting at least one per week as a prospective resident. I have one example: prospective resident has been in their home for almost 20 years, and the loan was sold to another bank, who either intentionally snuck in a clause that allowed the bank to adjust the interest rate MONTHLY (not annually as originally agreed), or began doing it in error and is not willing to correct it. Initial payment was LESS than the rent at the property. As a result of that clause, the monthly mortgage payment nearly QUADRUPLED in 2 years! Aside from that, the property was appraised (for insurance reasons)at less than HALF what is owed on the note! This is happening all over the country.

I keep hearing reports that Wall Street is seeing an end to this recession, but what about MAIN Street, where we all live and work???

Johnny, my other business is that I own real estate schools in Montana, Alaska, Idaho, Kentucky and Florida - so I deal with these sorts of questions all the time. The clause you mentioned is not only unlikely, it would be much more than illegal. The problem with so many of these sob stories is the situation being described is written right into the mortgage documents the person signed. No mortgage company can, or would be legally allowed to, raise interest rates monthly if the person had not signed a document at the close for that mortgage that allowed the bank to do this. Fine print is small, but that doesn't mean it isn't important. I would say less than 5% of the people in foreclosure proceedings have a legitimate complaint, everyone else is just trying to blame a bank for the fact they signed documents they did not read or care to investigate. Bottom line - someone walking away from a property they have lived in, and invested in, for 20 years will not think twice about skipping out on a lease. Their credit is shot, why bother following rules?

I agree with you 100% Christopher! People should take responsibility for purchasing homes they knew they couldn't afford.

Background and credit checks are great and a definate must but rental references should be right there with them. Everything helps in obtaining a great resident profile.

I just had a prospect come in and indicate that they were in the process of filing bankruptcy, and losing their home to foreclosure (currently so underwater on the mortgage they need scuba gear). They were in THIS home for more than 15 years (the first 5+ as a renter, then the owner decided to sell to them and guarantee the note); and their last home for more than 15 years as well....

In this case, the applicant's single biggest expenses (after housing) are medical care related (copayments and perscripion medications) for ongoing conditions. Both household members are on SSI Disability as a result of these. The current home is a 2 story and there are now mobility issues; so they are choosing to walk away.


This is not a question of responsibility. It is going on everywhere as a result of the economy.

The bank's reason for not negotiating? It would not make the investors happy. I am sure a vacant house that won't sell for the value of the note will make them just as happy.....

How do you address this?

Johnny Karnofsky wrote:

Now let's give an example of what a previous landlord might say about a former resident:

Landlord had to file for eviction in 2002, and was awarded a money judgement. If the applicant has paid the judgement or not, it may also appear in public records. Let's say it appears in public records, but applicant can prove it HAS BEEN PAID. What do you do?

There has been no answer to this part of the question.... anyone????

That's just a no, no question. It is one thing to have broken a lease or owed money upon move out. This is significantly more and shows irresponsibility - The landlord had to file for eviction to remove the tenant. I automatically deny any application for prior evictions, bankruptcies or foreclosures. Doesn't matter if they have finally taken care of it, it is letting things get to that point that is the problem.

I just disagree with you, Johnny. I don't think it is a matter of just an unfortunate turn in the economy. These people let matters get way out of hand if they are in foreclosure. It takes over a year for that process to play itself out, it isn't like missing one or two mortgage payments. For a person to have had to sell and move because they could no longer afford their mortgage payment, that is a responsible person and a good tenant. A person who just said "oh well, the economy sucks I guess I will just see what happens," that is an irresponsible person and would likely be a bad tenant. They have ignored months and months of notices, not taken advantage of numerous government and charitable options to solve the problem. Landlords rent to these people at their own peril.

I go back to the essential point - buying any investment is a gamble. Buying a house for a sales price of $200,000 and thinking that it would only go up in value is stupid and not supported historically. Yes, year over year, most homes go up. Some go down. That can be blamed on many things, not just the current economic climate. To not find a way to make it work and walk away from 10 years of equity just because the "owner" doesn't see when prices will rebound sufficiently is a bad sign to me. The quote about the bankers response is classic CBS anti-capitalist spin. No banker in their right mind would say that to a client trying to negotiate a mortgage, even if it were true.

Christopher Higgins wrote:

That's just a no, no question. It is one thing to have broken a lease or owed money upon move out. This is significantly more and shows irresponsibility - The landlord had to file for eviction to remove the tenant. I automatically deny any application for prior evictions, bankruptcies or foreclosures. Doesn't matter if they have finally taken care of it, it is letting things get to that point that is the problem.

The question is... how far back should you go? I think that, if the judgement was paid, and it occured more than 5 years ago; that the person has become wiser for it and is ready to start fresh with a new attitude. Keep in mind that, once paid, the court is supposed to remove the item from the credit report; so if you only go back one prior landlord, you may not discover it; and if the landlord that won the eviction action is NOT that last reference, this discovery would be an error.

Signing a lease w/ someone who has filed for bankruptcy that has not been discharged can be a major issue. It could be that any debt incurred during this time period, the resident would not be held liable for this debt when the Bk goes to court. Then you are not able to file a collection b/c they are not legally liable. Check w/ your atty. It is easy to feel sorry for persons in unfortunate circumstances whether they caused it directly through bad money management or maybe health issues, etc. BUT remember that we are not a social service agency. We manage a property for an owner & are responsible for protecting the owner's interest, not to provide housing for unqualified applicants.

I agree with you, D. My application and rental criteria do not state a timeline or sunset, the questions are "have you ever been evicted from a rental property?" , "have you ever filed for bankruptcy?" and "have you ever been foreclosed upon?", with some people adding repossessions to the list.

Ok let's use this real example. I can't attach, so I will describe results generated by On-Site.



Monthly combined application income to rent ration exceeds 2.5 PASS

Gross monthly infome after rent and estimated debt exceeds 25% of monthly income FAIL

Maximum percentage of past due negative accounts is less than 25% NO CREDIT

Unpaid collections and grossly delinquent past due balances do not exceed $1000 PASS

May have been through a bankruptcy PASS

Has not had an eviction lawsuit or landlord collection filed PASS


Let's say this person PASSES all criteria ( I know the results show a FAIL on Income after rent and other debts, but this has been recalculated and passes). This person has NO credit (I understand that NO credit or Limited credit history is better than BAD credit in this case).

This is a person who DID have an eviction filed in 2002, and has told you as much; but has proven the judgement has been paid and has learned his lesson.


Would you approve this applicant?

Hi Johnny and Chris,

I've been following this thread for the past few days and finally decided to jump in. I agree with both of you on certain items.

Chris, we do need to hold people accountable for the contracts they sign, whether it is a mortgage or a lease. If we didn't where would we be in our business. However; that being said I feel sometimes we need to look at the bigger picture. People do make one time mistakes and do learn their lessons.

Like Johnny, we use On-Site for our credit checking service. Anyone who uses this service knows it does much more for our industry than just check credit. Because you can tailor the "check points" to your companies criteria and your current market, you end up with a system that allows you to accept the most applicants at any given time by varying the risk your company is willing to accept.

I am the Director of Property Management for my company so I get to set these rules. I have set On-Site to automatically decline evictions and foreclosures. This doesn't mean I don't accept some of the individuals in these categories. It just means those folks will need to go through stricter screening.

We operate in California, which has some of the highest cost of housing in the US and the highest (or close to it) rate of foreclosures. When an application comes in that shows the prospects are losing their home, it lands on my desk. I review each file to see the overall use of credit and if these prospects have "refi'd" their home in the past. The refi part is really important to me.

I have seen many prospects who have done "serial" refi's over the past decade, each time taking out a higher loan amount. I don't know what they did with the cash, but now they are in a loan they can't pay and are losing the house. These folks generally don't get approved.

If on the other hand the prospects bought the house within the last 5 years and the loan has now "reset" to a point that they can't pay sometimes due to a loss of job or set back in their economy. If all their other credit is being maintained, I do accept them. All of this needs to be documented very closely, which is why all these files come to me.

Even though we use On-Site all prospects still go through rigorous background checking, previous housing, employment, etc. A bad landlord reference (and this can include late pays, noise violations, etc., up to an eviction) will generally be denied.

Sorry for being so long...Hope I added some value here.

Vickie DeSofi wrote:

Hi Johnny and Chris,


If on the other hand the prospects bought the house within the last 5 years and the loan has now "reset" to a point that they can't pay sometimes due to a loss of job or set back in their economy. If all their other credit is being maintained, I do accept them. All of this needs to be documented very closely, which is why all these files come to me.

What company do you work for and do you have properties in the Elk Grove area?

Let's talk about an example from earlier in the thread:

Appplicant has been in their current home for more than 15 years, and the lender has 'adjusted' the mortgage payment so much it is nearly 4 TIMES the original payment, and they are walking away for that AND other reasons. This decision was not reached lightly. As a result, the applicant intends to file bankruptcy; but will have enough income to meet their obligation to YOU AND satisfy certain debts that will be excluded from the BK filing (these will be vehicle payments and medical expenses; and are NOT delinquent currently), as well as ongoing utility costs. Forget about the fact that this income is SSI and Disability (the source cannot be considered beyond the fact that it is verified). Prior to this home, they were in their previous home for more than 15 years as well.

I cannot attach the On site results here, so I will describe below; but they have been honest with your staff and told you everything that is going on. After the bankruptcy is filed, the only outstanding debts, outside of the vehicle payments; are medical expenses and these will be excluded from the filing.



Household member 1:

Monthly combined application income to rent ration exceeds 2.5 PASS

Gross monthly infome after rent and estimated debt exceeds 25% of monthly income FAIL

Maximum percentage of past due negative accounts is less than 25% FAIL

Unpaid collections and grossly delinquent past due balances do not exceed $1000 FAIL

May have been through a bankruptcy PASS

Has not had an eviction lawsuit or landlord collection filed PASS

Household member 2:

Monthly combined application income to rent ration exceeds 2.5 PASS

Gross monthly infome after rent and estimated debt exceeds 25% of monthly income PASS

Maximum percentage of past due negative accounts is less than 25% PASS

Unpaid collections and grossly delinquent past due balances do not exceed $1000 FAIL

May have been through a bankruptcy PASS

Has not had an eviction lawsuit or landlord collection filed PASS

Household member 3:

Monthly combined application income to rent ration exceeds 2.5 PASS

Gross monthly infome after rent and estimated debt exceeds 25% of monthly income FAIL

Maximum percentage of past due negative accounts is less than 25% NO CREDIT

Unpaid collections and grossly delinquent past due balances do not exceed $1000 PASS

May have been through a bankruptcy PASS

Has not had an eviction lawsuit or landlord collection filed PASS



Would you approve this applicant?

We probably would not approve them. You cannot weigh an individuals personal story when you decide to approve or decline applications. You have to weight them on some form of company set criteria and be consistent. They are clearly in a credit crisis.

If you step back and look at the whole picture (and namely this thread) the underlying theme I think is the debate between relying solely on online credit screening, doing the research yourself or a hybrid. Do you want FAST results and if so how much data are you willing forgo for that ability? I know the online screening service provide a good service but it cannot be better than an individual doing the tough work. Some companies do not have the expertise or ability to hire and train a credit department. The online services can relieve you of that responsibility. Our applications do have a 2 day average wait period. (Mainly it's waiting for the rental references). As I said, are you willing to forgo some information for speed? My company says no.

As a tech / Marketing guy I would love to use an online service because of their speed and geeky tech things they offer. We live in a fast world now... a lot of people aren't willing to wait several days. It's possible to be approved for a car loan within minutes...why not an apartment?

I understand where you are coming from Bill, but let's take the THIRD Household member as follows:



Monthly combined application income to rent ration exceeds 2.5 PASS

Gross monthly infome after rent and estimated debt exceeds 25% of monthly income FAIL

Maximum percentage of past due negative accounts is less than 25% NO CREDIT

Unpaid collections and grossly delinquent past due balances do not exceed $1000 PASS

May have been through a bankruptcy PASS

Has not had an eviction lawsuit or landlord collection filed PASS


Let's say this household member (not a party to the foreclusure or bankruptcy) wants to apply on their own for a smaller floorplan. Let's also say that this person discloses an eviction that the On-site (or other background check) does not discover, but proves the judgement was paid. Would you approve this member on their own? This person initially failed the one key point, but the figures were miscalculated and redone; so the applicant actually passes.

It's hard to answer your post Johnny because there are more factors here than just PASS / FAIL. As a tech guy I love the concept of "one size fits all" electronic screening. The fast of the matter is every application has unique circumstances and must be handled in a unique fashion. It's why even though our screening can take upwards of 2 days or more it allow to you analyze a prospect with more than just PASS FAIL.

As I've already stated, you cannot answer the question because you do not have enough information to do so.

As an "investigative" screening company, we STRONGLY encourage rental verification as part of your rental qualification process. If you wish not to outsource this step to a screening company and incur the cost in doing so, then in the very least, you and/or your staff should be picking up the phone to very their most current rental history (in the least).

The eviction you are looking for, is the one that is happening RIGHT now! It is VERY unlikely that that information will show up on any eviction search that you run due to the delay in the court that is being accessed OR the database that your screening company is utilizing.

Please note that some database records (depending on the state/county) are only updated quarterly at best. There is a difference between companies, as to what resource is being used to search public records. Be sure to clarify these details with your current screening vendor.

To take it a step further, we would also encourage you to verify additional addresses reporting to the applicants credit. How likely is it that they are going to provide an address on the application of the location where they are currently being evicted? If the addresses on the credit do not match that on the application, ask "WHY?".

Check with your current vendor to find out if they are verifying additional addresses. When I say verify...I mean, are they picking up the phone and making the calls.

If you would like to discuss further, please do not hesitate to contact me! This email address is being protected from spambots. You need JavaScript enabled to view it. www.moco-inc.com

We check the last 2 years rental history in addition to using a screening service. Personally I think this is a MUST. Having worked for a company in the past that only used a screening service I have seen one resident whom I evicted myself move to my sister community next door, be evicted from there and move to another property owned by the same company. All of the properties were offering large rent concessions and she was able to live for about 6 months rent free! Needless to say she was eventually evicted from there as well and had the nerve to come back to the community I evicted her from because she knew I was gone. Unfortunately for her I was covering the office and found her application in process and was able to finally get her out of our hair!!
It's amazing what people will do, and taking a little extra time to cross check things can save you a ton of money in the future. Making nice with your competition is also very helpful. Although there are about 160+ communiteies in the county I work in most of us have formed some sort of relationship and will not hesitate to pick up the phone and call a competetor to get "the scoop" on a prospective resident.

As to the bankruptcies, we will accept only if it has been discharged.

"Online Screening Company"

Let me provide some additional clarification on "Online Screening Company" vs. NOT.

I believe you can categorize screening companies in one of two ways; but not by whether or not they are "online". It would seem that this thread speaks to the quality of the screening when referring to "online", so I think it is important to clarify.

There are "Investigative" Consumer Reporting Agencies and "Computer/Database" Consumer Reporting Agencies.

While very different, I have seen both "Online".

Computer/Database Consumer reporting agencies, often rely on database information for their public records (criminal/eviction) information. It is likely that if using this model, your staff is entering this information into the computer and you are obtaining information instantly (or very close). The service is quite fast!
You may or may not be getting reports that include recommendation or a yay or nay based on credit score and income multiples.
It is fast because all, if not most of the information is being generated by the computer. Public records are only being searched on the name that you have entered into the system. Often times, you may also see similar name matches show up on the public records area of your reports.


Investigative Consumer reporting agencies often take a more hands on approach to screening. They have investigators employed to physically look at the application, review each individual trade-line, confirm similar name matches on public records, do additional searches on alias information and provide rental and employment verification. They do not rely on a computer generated recommendations, but instead rely on an idividual to identify these items and consistantly apply customized criteria.
Quality vs. speed takes an upperhand.
(ex. 1/3 of all public records hits are the result of additional searches on AKA's and out of state addresses. What could you be missing without AKA searches?)

Some "investigative" companies can provide credit/criminal/eviction reports back within a couple hours. Rental and employment verification in 24-48 hours.

Again, both types of these services can be found "Online" and are web-based solutions. If you are concerned about quality, you don't want to rule out a company simply because it is "Online" and or web-based. You could be overlooking a company that is a good fit for you.

What kind of credit reporting agency you use depends on what is important to you and your firm.
Some important variables to consider: Quality, Service, Turn-around time, Liablity, Property type (A,B,C??)

Here's a good one for you: How about Independent Senior Living Communities that ONLY check criminal background? No other verifications...not income, not rental history...nothing. Have any of you ever seen this? I haven't!

Amazingly, because the Senior population generally pay their bills on time, they haven't been burned yet but I see it coming!

Thoughts??

I actually manage a 62+ community. We still screen all applicants for criminal, credit, and rental. However if their credit is not in our acceptable range we will most likely still accept them (pending the outcome of the other screening) with a larger deposit. So far we have only had this happen once.

Thanks for bringing this up Tami. You of course speak correctly however it's easy to confuse the difference. We are our own "Investigative Consumer reporting agencies" and so therefore when I discuss online I speak about the quick, fast (not as indepth) results. You are correct. There are really 3 types. Doing it yourself, Computer/Database Consumer reporting agencies, and Investigative Consumer reporting agencies. Where they are really isn't relevant to our discussion. I stand corrected.

One of the properties I was at was a Tax Credit property, and the screening included credit, criminal, and eviction checks. When a potential match was found in the criminal or eviction database (as is possible with names that may be common like Jones or Smith); we would send a message to the service asking for an identity confirmation. With credit, we were looking for applicants that has open collections for utilities and declining them until resolved (meaning the debt was paid, or forgiven with proof by the provider). This was for any utility for any amount (even if it was $5)

Wow. I didn't think my question would create such a conversation, but I'm glad we're talking about this...

After reading all of the responses, I find it very curious that when it comes to screening, no one seems to consider Fair Housing. Just FYI... I'm not taking sides either way. I just want to hear what everyone has to say.

Every other topic whether it has to do with pricing to amenity hours seems to ultimately end up with "well, because of Fair Housing" and the solution is always black and white.

How can you possibly request information about someone's rental history and make a judgment without seeming biased? We've all said "bad rental history" would be declined. What is "bad rental history?"

Is it more than one late payment? Why are there exceptions to bad credit if they always pay rent on-time?

Also, if someone says they wouldn't rent to them again can you really use that against them? What if the person who is making the recommendation had a bias against your applicant? You wouldn't know it, but you end up continuing the biased behavior.

It all just seems very funny to me. Honestly, I think screening should be more black and white. I realize most people would say that's not the best way, but doesn't something else increase your liability to a lawsuit?

Again, I'm not taking either side. I'm just curious.

Sorry - two copies of same post. My mistake.

David - that is an excellent follow-up question. In a very small group of cities, credit and criminal history can be a protected class. But because their is no federal fair housing protection that lists credit, criminal history or rental/housing background, and non state-wide that I am aware of, it can be "discriminated" against. I say in my fair housing seminars that some of the only legal things you can pick on is someone's income or credit. A law to treat everyone equally cannot require us to make risky decisions. The part that does occasionally lead to lawsuits is when a landlord or management company goes by "gut" and doesn't have a stated list of criteria. I can't tell you the number of times an old landlady has told me on a shop "oh, you look nice, I won't even bother with the application or fee." If one couple goes in and gets denied because of an eviction from four years ago, and they happen to be black, and another couple goes in with an eviction four years ago and they are approved, and happen to be white, there is no way for a landlord to support his decision. The couple can claim they were discriminated against. A landlord is free to make their criteria very stringent, or relatively weak. As long as they enforce it consistently. For instance with this discussion we have been having, I always deny anyone who answers yes to a bankruptcy, drug arrest or eviction. That is a blanket policy and I don't make any exceptions. No exception=No fair housing issues.

Let's take criminal history specifically. What can/do you do when you discover that an applicant (or worse, current resident) is registered (or is required to) as a sex offender? Can you take the context of the charge into consideration?

For example; let's take applicant 'A' who comes up as a registered sex offender as the result of a 10 year old charge from when he was 18 and his girlfriend was 16 (and they had been seeing each other for a year or more) and it was not a breakup that would be considered amicable. This charge, whether filed by the girl or her family; would require him to register for life. The types of offenses that would require a person to register as a sex offender are so broad, that we need an attorney experienced in criminal law to interpret them.

Another example: Resident 'B' has a child who is convicted of a sex offense, and is released from prison. Resident 'B's child has no place to go and needs to stay with family. Because the child is probably 18, you need him to fill out an application for residency. Can you deny the child?

Johnny, you may have missed your calling - I think you should be a social worker or maybe work for HUD! Kidding, of course. I just don't tend to listen to all of these details, I DO try and make it pretty black and white. If I find an applicant or prospective resident is a sex offender, that is an automatic denial or eviction. A "child" that is a sex offender, probably is over the age of 18. My application and criteria clearly state that all occupants over 18 must qualify INDIVIDUALLY, which means they meet all current criteria, including the criminal element. If they can't qualify, they can't occupy.

I had a friend in high school with a similar issue as the one you describe. He was 17 and had a younger girlfriend, and the bad parents of that girlfriend decided to pursue him as a sex offender rather than accepting responsibility, and reality, for what their daughter had engaged in. So he registers as a sex offender. But I am not law enforcement, and I am not the judicial system. I am a landowner who doesn't want to be sued, and adherence to a strict set of criteria has kept me clear. Gray areas get us in trouble in housing.

Johnny - Let's remove "sex offense" from your scenario and change it to "burglary."

Would you allow someone who has an adult child that was convicted of burglary to move-in to your community?

My guess is the answer would be "no."

The criminal criteria I have seen have included AUTOMATIC denials for the following (just off the top of my head):

-Crimes involving violence
-Theft crimes
-Drug possession, sale, or manufacture

Recently joined the multifamily insider and starting reading the comments regarding this subject.
I can see both sides to this concern however I do think it should be looked at more black and white. Yes, people make mistakes and can learn from those and change but that's where your criteria should set the tone.
From a property management background I would say no evictions, bankruptcy or forecloses with in the past 7 years. I think that gives time for one to prove themselves again, when companies make exceptions based on feelings and not reality, I would say they loose 80% of the time. In addition I have personally seen cases where a company only using the credit report as a source of approval and is burned due to lack of research. If you check past references as well it give you a better since of security.
Here in Houston we have a Rental History service through our Apartment Association that provides local up to date rental history with the most effective credit and collection reporting tool. It’s effective and it works. Subscribers enter the move-in / move-out history on a regular basis so you get it first hand before waiting for it to show up on a credit report that could take up to 90days or longer.

I would be interested to find out if other sources provide this type of service? It’s a great tool to look into…

Many of our property owners and managers use an automated decision table that leaves a paper trail of why a person's rental application was declined. When the criteria is preset and electronic, it doesn't get any more black and white. Also, Tawanna, there is a company called PRBC, Pay Reporting Builds Credit, that has been tracking rental payments and other types of recurring payments like utilities for many years. MicroBilt, my company, purchased the company about a year ago.

It actually is accompanied by the FICO Expansion Score, which aligns with a traditional FICO Score.

Here's a link to a sample of the report:

www.microbilt.com/pdfs/PRBC%20Sample%20Report%20(complete).pdf

-Matt

David Kotowski wrote:

Wow. I didn't think my question would create such a conversation, but I'm glad we're talking about this...

After reading all of the responses, I find it very curious that when it comes to screening, no one seems to consider Fair Housing. Just FYI... I'm not taking sides either way. I just want to hear what everyone has to say.

Every other topic whether it has to do with pricing to amenity hours seems to ultimately end up with "well, because of Fair Housing" and the solution is always black and white.

How can you possibly request information about someone's rental history and make a judgment without seeming biased? We've all said "bad rental history" would be declined. What is "bad rental history?"

Is it more than one late payment? Why are there exceptions to bad credit if they always pay rent on-time?

Also, if someone says they wouldn't rent to them again can you really use that against them? What if the person who is making the recommendation had a bias against your applicant? You wouldn't know it, but you end up continuing the biased behavior.

It all just seems very funny to me. Honestly, I think screening should be more black and white. I realize most people would say that's not the best way, but doesn't something else increase your liability to a lawsuit?

Again, I'm not taking either side. I'm just curious.

David, I think you hit the nail on the head. I have been in the screening business for 11 years, working with local and national property management companies all across the United States. The vast majority, 90% or more, of my clients have abandoned the landlord verification process.

People are afraid to report that a resident caused problems, because they either are afraid of getting sued or they simply want that person out of their community.

The availability of data today allows the screening companies to get a great amount of information, allowing the system to approve, approve with conditions or decline applicants effectively....without the risk of possible Fair Housing issues.

Here is an example using my situation. I lived in my house for 5 years. My ex husband was making over $100,000 a year. Then he got laid off and could find work. Then he took off one night and left me with all the bills. Obviously I couldn't afford to pay much in the way of the bills considering I was make less than 1/3 of what he was making. My credit prior to that was excellent and prior to buying our house I rented from the same company for 5 years with one late pay due to a mix up with a paycheck. No criminal history of any sort and I always take excellent care of places I live. I am renting from the same rental company as I rented from before. (The house was only in my ex-husband's name so there was no way to renegotiate that, but I it also doesn't list on my credit as a foreclosure.) Now I am moving to new town, I need a new place to live. I am very upfront with my situation, my credit score, I qualify with my income easily, I have a great rental reference. Would you rent to me?
We use credit and criminal background and landlord references to qualify. If the score is under a certain number it is up for review. If they have a good landlord reference and income verification then we will consider renting to them with double deposit depending on the situation.

Again, it all depends on what your companies policies are on credit worthiness. At our property, we do not take things as a case by case basis but we have policies set and those are the policies we abide by with no exceptions. If you don't then you are looking at a possible discrimination case. I agree with whoever said it when they said that at no time do I care about their personal situation. I think of this business like I do any other sales business... When you go to buy a car do they care if you were divorced and your husband took everything? Nope all they care if they can get you financed. If you apply for a credit card do they care about your situation? No they just care about your credit score and income. It's very black and white. We are in the sales business and we are providing housing and in some cases that housing in worth upto $12,000 or more for a one year signed contract which is no different then someone walking off the street wanting to purchase a used car. My supervisor says it best... if you want to take a chance on someone then you feel free to sign on the dotted line to co-sign for them. You become financially responsible for them... lets see how many sob stories you would take into consideration when it's no longer someone else's money.

Chrissy, if you ever are looking for a job, please contact me! If only more on-site people thought like this! Awesome.

Thanks! I'm all about being a humanitarian in my personal life but it's business and like someone said we are not a social service industry. Those people will find housing and let the other apartment communities be the one to take the chance. I'm a firm believer... I'd rather it sit vacant then to rent to an unqualified person. I would put money on it if you followed the people that were described in this topic and found out where they rented and keep track of them... I would say a large percentage of them you will find bad payment history as well as possible evictions from their future housing.
I have noticed since this economical crisis has begun more and more property managers are screaming bad economy and the fact is not everyone has been crippled by this crisis and there are qualified people out there that still need a place to live... instead of harping on how bad it is out there we all should be focusing on how to get those qualified people to your community and not somewhere else and the way to do that is by NOT dropping your standards and allowing unqualified people in. Qualified applicants are not going to want to live next to someone who isn't. You may ask, "how would they even know?!?" well not to be rude but when you drive into an apartment community and there are a bunch of beater cars and people walking around in the middle of the day it gives a clear picture of the type of people that live there. I'm just saying, it takes just a few "considerations" to turn your property into a less than desirable place to live.

You know I could not agree with you more. I wish there were more people who looked at it that way instead of comission driven. Don't get me wrong I love to make money, but not at the expense of being imbarassed of my workplace. I love what I do and the place where I work so I am going to do what is in my power that we keep the property at its best.

Hiya.....

Hmm......it's considerable.....! Well u may take help from southern Maryland rental so if u want may visit on that link.It might have been useful for u.


Thanks

You're right to want to approach conditional acceptance in a business manner based on policies and screening. The "compassion" you speak of can come into the picture with how you help a potentially good renter help themselves. Specifically, what does your community offer that let's an applicant clearly demonstrate their desire to pay rent on time? For a person with stellar credit, you may provide e-pay options in the form of credit cards or ACH. For the applicant whose credit has been hurt - for whatever reason, you can also provide an e-pay option that reduces payment risk to your community. NPS provides the only e-pay program in Multifamily based on payroll direct deposit that accumulates "installments" toward rent each pay period on a prorated basis. Funds for rent are put assize with NPS before the renter has a chance to spend them on other needs. The property gets paid on time, and the resident gets the housing they want - and a chance to rebuild credit since payments are reported. A win-win all around.

Great suggestion. Specifically how are payments reported?

Do any of you remember those fax request forms we had to fill out in detail, and then waiting next to the fax for the return cryptic “OK”?

I do remember those days! And sometimes waiting for days,I enjoy the speed of running credit checks through a third party system on site, and having the ability to override the decision of the program when needed, but I wonder how affective the newer systems are, because like many have said, they don't do rental verifications when the credit comes back clean, which is how my company operates, but there is a window of time, and depending on the company the skipped on it may never hit their credit report. Doing rental verifications is the only way I see to avoid this. Anyone else have another way?

That was actually my original question because my company does currently require the "cryptic" verification form to be faxed back in addition to using LeasingDesk for screening.

Reported to PRBC. Thanks for asking.

Hi David,

We complete Prior Landlord verification on all of our applicants, even if they are approved without conditions by our screening division.

We request a fax or mailed verification to be sent to us, which covers the length of residency, payment history (late or not), and if proper notice was given. We like to go back at least 2 years. If the information is not available via fax or mail, then in our conventional sites ONLY, they can complete a phone verification and possibly a home visit. Of course, if its an Affordable Housing community, then they will be required to have a written notification in the file.

Hope this helps!

Thanks,
Pedro

Although the property I previously worked with utilized Safe Rent, we were given lead way as to whether or not to approve. For instance as long as there was no criminal history we could approve with conditions. As I am sure you are aware they often include a larger security deposit or more income verification. Again, I want to stress that no one with a criminal history that was turned down by Safe Rent was ever approved in house. We did however; take each individual on a case by case basis and make our best judgement. This often involved calling previous employers and previous property managers. Hope that helps?

The whole purpose of using a screening company is to eliminate the possibility of someone making an unauthorized rental decision. You can set up Safe Rent screening parameters that will produce an "Accept with Conditions" recommendation. To deviate from your screening company puts you at risk of violating Fair Housing laws.

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hi,
and thank you for the information. I have only one house and the last tenant caused extensive damages. I need to learn from you where can I check and if I can do it myself and save money. and the tenant I evicted and don't know where they moved to. I need to get judjment on the damages.

Not only do we require it, it is a HUGE part of our verification process. We do the civil, credit, criminal check. Heck, anyone can do it and everyone has that fiduciary responsibility. But we place our emphasis primarily in 2 areas: 1) the personal interview, and; 2) the verification of rent.

There is a ton of application fraud going on. The most common is where the applicant puts his/her best friend down as the landlord. We screen for that. Most apartment communities take that option out. For houses we look up the owner through county records. Then we bust 'em! Works like a charm!

You can read our entire screening criteria at www.fullservicepm.com .

I understand where you are coming from, Peter; but what do you do if you have an applicant with a common name (or even a generational family name, like Sam Jones III) and you have potential name matches on the civil and the criminal check?

True story 1:

I had an applicant that had a common last name and it came up with a potential name match in the criminal database for a felony. I contacted the screening company and had them do an identity match on their result. Sure enough, my applicant was not only of the opposite gender, was of a different race, AND the match was in a state where the applicant had never been in!

True story 2:

I had an applicant with a generational name and had not only criminal matches, but an eviction match in public records that were admitted and taken at face value to be the FATHER! This employer did NOT use a screening company and relied on the information in public records as true and correct, although grossly incomplete. Against MY recommendation to deny the applicant, the employer approved him and within days of moving in; he got into a verbal altercation with the landscapers, broke 1 of the windows in the unit (from the inside) and THEN broke 2 MORE windows WHILE I was there taking pictures of the original damaged window! This incident was followed by him breaking a window in one of the laundry rooms, threatening me with a baseball bat, kicking IN the entry door to the unit making it so the frame needed to be repaired so the door can be secured.

All I can say for story # 2 is that this was a case study to support recommending the use of a screening agency with a set of paramerters to follow that would have found the missing information that was needed. I needed to have the attorney draft a 3 day notice of noncurable cause to vacate and this resident got NONE of the deposit back (in fact there were additional charges to return the unit to rent ready status 2 weeks after move in).

Do property management companies have to provide rent verification when requested by tenants or mortgage companies?

I'm so glad that you brought this up. I work in screening and reducing false positives is actually fairly new. There are only a handful of providers that actually have a safety net in place to reduce the number of reports that will return on someone with a common name. Many people don't realize that criminal and eviction reports are public record and they are not associated with a social security number so matches occur are just the result of common name. In my company we call our tool subject selection, it uses other identifiers to match the record with your applicant. When you pull credit reports from us and then the criminal report is pulled, the technology works in the background, even pulling address history from the credit report so you it has more information to verify if the criminal report is an actual match.

I've been homeless since December 2016 it's been a money in a hotel me and my 5 kids really don't know what these letters put on my background but one Lander probably put that I destroy the closet if the water pipes is leaking on both sides of the apartment rooms my room and my kids room the bathrooms in the middle of the house apparently I destroyed it the next landlord I told him the truth I couldn't afford the house no more so I gave him back the house never destroyed it that was hard for me to find a place to live with my kids little bit of money I had saved don't want in a hotel tired looking now everytime I look for place give them money for the application and background 65 - $80 if not a little bit of money when you have 5 kids to take care of then to get denied it's frustrating being here now

I need to get eviction removed off my record because I can't get any landlords to rent to me because of the eviction.

Pay the judgment, get a cosigner...