The latest Boston area real estate news recently included the U.S. Department of Housing and Urban Development (HUD) issuance of new regulatory guidelines to the Fair Housing Act. The new guidelines more closely quantify and qualify “those actions or policies by landlords, property managers, real estate agents or lenders that could be classified as discrimination” against people protected under the Fair Housing Act. Under the new regulations, HUD is able to charge those in violation of the act and have the U.S. Department of Justice (DOJ) represent the complaining party. Violations carry with them the possibility of damages paid to the complainant in addition to potential civil penalties and applicable punitive damages as determined by the court.
This past April, HUD added a codicil to the Fair Housing Act regarding the assessment of criminal records in certain real estate transactions. HUD contends that refusing housing to people based on their criminal background or arrest record is discriminatory. Their reasoning? Because a disproportionate number of people with criminal pasts are comprised of racial minorities. In addition, this past September, HUD further opined that language-related housing restrictions or caveats violated the Fair Housing Act. Their reasoning? They contend the language barrier between the national origin of those seeking housing closely corresponds to their limited proficiency in speaking English.
So, what’s behind the new regulatory guidelines and why are they in the latest Boston area real estate news? Experts say clarification is an important addition to the Fair Housing Act because such measures help to better define discrimination in housing, and to close potential loopholes to provide equal housing opportunities to all U.S. residents. Furthermore, with home ownership at its lowest rate in over 50 years, more and more people are renting. HUD wants to make sure property managers are well-versed in the guidelines and their ramifications. With more people renting now than owning, HUD is aware that the ongoing relationship between the housing provider – the landlord – and the property manager extends longer than that of a real estate agent or mortgage lender. In comparison, while an agent’s or lender’s involvement with a person protected under Fair Housing ends upon completion of the transaction, the landlord and property manager interaction continues throughout the term of a lease. In addition, according to experts, many housing providers and landlords are not “up to speed” on the Fair Housing Act regulations and are not complying as a result. Enter HUD to start better policing the industry.
HUD’s ruling regarding limited proficiency of the English language was designed to clear up existing grey areas or implied loopholes. The new regulatory additions say the refusal on the part of property managers or landlords to rent to people who can’t speak fluent English is discriminatory, based on their national origin. In addition, the law encompasses all areas of housing – including lenders. What this means is that lenders must be able to translate forms and allow for interpreters to be present during the loan application process and the loan closing. HUD has identified this shortcoming as a hindrance that, until now, has prevented prospective borrowers who don’t speak English from getting mortgage financing.
Experts say as trends in housing tend to grow and change, more regulatory guidelines will ultimately be added to eliminate the loopholes and grey areas which still exist – especially regarding the responsibilities and limitations on housing providers. Most property managers expect HUD as well as state legislatures to provide additional guidelines to further clarify what’s expected from the rental housing industry. Better regulation within the industry, on both the federal and state level, would allow for educational opportunities for housing providers and landlords, therefore minimizing the number of occurrences of violations of the Fair Housing Act.
Property management insiders say their hope is the states recognize there is an information breakdown, and awareness is needed to educate people working in what is a specialized niche within the real estate market. They cite training for landlords, housing providers and property managers as the most important factor to help them understand the regulations and their obligations under the Fair Housing Act guidelines.
One property manager summed up a critical issue affecting the rental industry and the impact some decisions make with respect to the regulations. Their expectation is that additional regulations will eliminate the subjectivity of opinions in the process of leasing rental units to minorities and others. The property manager went on to say that he usually suggests property managers distance or remove the landlord from the decision-making process when it comes to the rental properties. After all, he contends, that’s what property managers are for. They are the experts. “You take out any sort of human judgment… because even if it’s well-intended, there could be something that would have ramifications… counter to the HUD guidelines,” he said.
HUD normally tailors their new guidelines and clarifications based on previous Fair Housing Act violations of which they are made aware.
The prognosis seems to be clear. Fair Housing Act regulations will likely continue to be part of the latest Boston area real estate news. The government, it appears, will add more layers to the Fair Housing Act in an effort to ensure those protected under the Act will not be subject to discrimination. While it’s a noble, admirable end – nobody should be a party to discrimination – the means to that end remain bureaucratic, arbitrary and borderline overkill.
As long as the home ownership rates continue to be as high as they are, more people will be forced to rent – including a large number of people protected under the Fair Housing Act. Those people include substantial numbers of minorities as well as non-English speaking tenants who’ve migrated into the United States.
The latest Boston area real estate news is that we can expect Fair Housing Act regulations to get broader to encompass more aspects of rental real estate and housing.
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