Criminal Conviction Restrictions for Fair Housing Testers: HUD’s Final Rule

Fair housing testers working with Fair Housing Initiatives Program (FHIP) grantees and Fair Housing Assistance Program (FHAP) agencies are used to identify systemic biases in the housing industry. These testers mimic real-world housing transactions to uncover racial, gender, and other forms of discrimination. HUD recently published its final rule, Expanding the Fair Housing Testing Pool for FHIP and FHAP Funded Entities, to remove criminal conviction restrictions for fair housing testers.

One level deeper: Through this final rule, HUD eliminates restrictions for FHIP grantees and for FHAP agencies that currently bar FHIP and FHAP entities from using fair housing testers with prior felony convictions or convictions of crimes involving fraud or perjury. The rule also is intended to ensure FHIP- and FHAP-funded entities can fully investigate criminal background screening policies that are potentially discriminatory under federal civil rights laws by using a diverse group of testers with actual criminal convictions.

The bottom line: The effective date of the rule is May 3. At some point, your site may be approached by fair housing testers and your screening policies may be examined. A HUD memo issued in 2022 outlined the ways criminal background screenings may violate the Fair Housing Act (FHA). According to the memo, the FHA prohibits:

• Denying housing based on arrest records;
• Blanket bans on anyone with a criminal record; and
• Conducting background checks inconsistently, by performing them on some and not others based on stereotypes or fear.

Further, an owner must consider applicants on a case‐by‐case basis and evaluate the nature and severity of the crime; consider the length of time that has passed since that crime was committed; and make a determination based on facts and evidence, and not a perceived threat.

The memo also provides some examples of evidence that would support a finding of reasonable cause to believe that there was discriminatory intent or that disparate treatment occurred. Such a finding would make an owner liable for discrimination under the FHA.