The Applicant With a Criminal Record and a Co-Signer
An applicant applies for a 2-bedroom at $1,650/month. Credit score 610, income $4,900/month (about 3x rent), no eviction history, but a 2019 felony conviction for possession with intent to distribute, released 2021, and a 2023 misdemeanor for disorderly conduct. The applicant offers a co-signer with a 780 score and $9,000/month income. Your written screening criteria say: income at least 3x rent, no unpaid judgments from prior landlords, and criminal history reviewed case-by-case with an individualized assessment. The community manager wants to deny based on the felony and the co-signer offer, saying "a co-signer doesn't fix a criminal record."
1. Apply the written criteria and fair housing analysis. What is the correct decision process?
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The criteria require an individualized assessment of criminal history, not an automatic denial. The correct process:
- Verify the record - confirm the conviction and disposition through a consumer report and give the applicant the required adverse-action notice and opportunity to dispute if you are leaning toward denial.
- Conduct the individualized assessment on the factors that matter: nature and severity of the offense, time elapsed (2021 release is several years), evidence of rehabilitation, and whether the conduct poses a demonstrable risk to residents or property. A drug-possession conviction from years ago with no violence and no eviction history is weak grounds for denial on its own.
- Consider the co-signer - a qualified guarantor addresses the financial risk, which is the income/credit criterion. It does not erase criminal history, but the manager's statement conflates two separate criteria. Financial qualification and criminal-history review are analyzed independently.
- Do not use arrest records or the misdemeanor alone as a proxy; the disorderly conduct matter should be assessed on its facts, not treated as cumulative weight.
The likely correct outcome is approval, with the co-signer documented as satisfying the financial criterion and the criminal-history assessment documented in the file.
2. What documentation must exist if the decision is to deny?
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If, after the individualized assessment, you deny, the file must show:
- The specific written criterion applied and the specific conviction relied on.
- The individualized assessment - what factors you weighed (nature, severity, time, rehabilitation, risk) and why they supported denial.
- Adverse-action notice with the consumer reporting agency's information and the applicant's right to dispute and to request a copy of the report.
- A record that the co-signer was considered and why it did not change the outcome (i.e., the denial rests on a safety/risk rationale, not on finances).
What must not appear: blanket statements like "felony = denial," reliance on arrests without convictions, or the manager's offhand comment as the rationale. A denial without an individualized assessment is the classic disparate-impact and disparate-treatment exposure.
3. The manager's comment - "a co-signer doesn't fix a criminal record" - what is the training issue?
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The comment reveals two errors: (1) treating criminal history as an automatic bar rather than a case-by-case assessment, and (2) misunderstanding that a co-signer addresses a different criterion (financial capacity) and should be evaluated on its own terms. The training fix is to separate the screening criteria into independent tests - income/credit, rental history, and criminal history - and to require that each be documented separately. Staff should be taught the individualized-assessment factors and the adverse-action process, and managers should review denials before they go out. A single offhand comment in a file or email can become the exhibit in a discrimination claim, so the standard is: every denial states the criterion, the facts, and the assessment.