Almost a third of Americans — 100 million people — have a criminal record, and 650,000 are released from prison each year, adding to the total.
This relates to housing because the U.S. Department of Housing and Urban Development recently released guidelines to help rental housing managers and real estate brokers create a non-discriminatory housing policy for people with a criminal record.
Of course, people with a criminal record are not a protected class under the Fair Housing Act, but minorities are, and minorities are disproportionately represented among those with a criminal record, according to HUD.
Under the government’s guidance, the goal is to take a nuanced view when you create a housing policy. For example, if your policy makes a blanket rejection of anyone with a criminal record, it’s likely to have a disparate impact on minorities. So the guidelines recommend you take other factors into account. Was the infraction a long time ago? Was it relatively minor?
To help you, the government created a Dos and Don’ts chart. Among the dos is a recommendation that you take into account whether an individual undertook rehabilitation. Another is whether the individual, if the infraction involved a controlled substance, was convicted of mere possession or something more serious, such as distribution or manufacturing.
“How to account for a criminal record in your housing policy” is a top story in The Voice for Real Estate, NAR’s news video. The video also looks at NAR’s effort to improve the availability of federally backed loans in rural areas by making the Rural Housing Service loan program more user friendly.
Right now, every time a lender writes a loan under an RHS program, it has to get upfront approval from the federal government. That puts loan applicants at a competitive disadvantage with other borrowers. That’s because in no other federal mortgage loan program is upfront approval required. NAR’s solution is to make RHS more like the other federal loan programs, which today account for the lion’s share of loans.
The video also looks at reverse mortgages. About a million of these mortgages have been made since FHA started insuring them in 1988. The loans are intended to help home owners 62 years of age or older access the equity in their home if they have or all or most of the mortgage paid off.
The issue for real estate professionals is the pay-off requirements FHA imposes, which can be confusing if you’re not familiar with them, and thus raise implications if you’re listing a home for sale that has a reverse mortgage.
The main issue is timing. Once the home owner moves out of the house, perhaps to live in an assisted living facility, a clock starts ticking before the mortgage is foreclosed on by the lender. So, if the kids or the estate want to sell the house, they have to do it against this ticking clock. There are other issues, and the video gives a thumbnail sketch of them and invites you to access a webcast Realtor Magazine hosted on the topic.
Access The Voice for Real Estate.
Access the webcast on reverse mortgages.
Robert Freedman is director of multimedia communications for the National Association of Realtors.