Bill Text: NJ A2838 | 2024-2025 | Regular Session | Introduced
Bill Title: Establishes guidelines for creditworthiness determinations concerning affordable housing programs.
Spectrum: Partisan Bill (Democrat 5-0)
Status: (Introduced) 2024-01-09 - Introduced, Referred to Assembly Housing Committee [A2838 Detail]
Download: New_Jersey-2024-A2838-Introduced.html
STATE OF NEW JERSEY
221st LEGISLATURE
PRE-FILED FOR INTRODUCTION IN THE 2024 SESSION
Sponsored by:
Assemblyman ANTHONY S. VERRELLI
District 15 (Hunterdon and Mercer)
Assemblywoman VERLINA REYNOLDS-JACKSON
District 15 (Hunterdon and Mercer)
Co-Sponsored by:
Assemblyman Atkins
SYNOPSIS
Establishes guidelines for creditworthiness determinations concerning affordable housing programs.
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act establishing creditworthiness analysis guidelines for affordable housing and supplementing P.L.1945, c.169 (C.10:5-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. The Legislature finds and declares that:
a. The current shortage of affordable housing in this State has forced many low and moderate income New Jersey residents to live in market rate housing they cannot afford but must occupy rather than face homelessness.
b. After paying rent, these struggling families and individuals are frequently left with less money than needed to meet other basic household obligations. Late or partial payments, as well as missed payments made up in subsequent months, are often the result.
c. These undesirable but unavoidable decisions negatively affect many households' credit reports and inevitably lead to lower-credit scores for these New Jersey residents.
d. Access to housing with affordable rents would remedy a major cause of the financial difficulties experienced by lower-income persons, leave them with more income to meet their basic expenses, and help them to restore their credit standing.
e. Those households fortunate enough to obtain tenant-based housing subsidies, or access to cost-controlled housing units, generally after years spent on waiting lists, are often rejected by landlords based upon inadequate credit assessments.
f. These credit assessments overlook the totality of the circumstances that confronted the particular family or individual in question, fail to recognize that the credit issues are generated by the very problem that affordable housing would resolve, disregard the limited choices available to affected households, and discount their best efforts to deal with those challenges.
g. Available reports, studies and data demonstrate that, because of past and present discriminatory practices, and the persistence of structural and intentional racism, unregulated and unlimited use of tenant screening criteria, including those such as credit scores and reports, and other forms of credit analysis, have disparately impacted African-Americans, other people of color, the disabled, and other protected classes, and have also been used as a pretext to accomplish otherwise prohibited discrimination against members of those classes.
h. It is in the interest of the public to ensure that low- and moderate-income persons are not unfairly denied the opportunity to obtain housing they can afford and desperately need.
i. It is also in the public interest to establish, in relation to housing subsidy and affordable housing programs, fair and just standards and guidelines for credit evaluation and the use of credit scores, credit reports, and related assessments of creditworthiness or fitness to be a tenant.
2. For the purposes of P.L. , c. (C. ) (pending before the Legislature as this bill):
"Ability to pay rent" means:
a. for federal, State or local voucher holders, or applicants for project-based deep subsidy units, that the gross monthly household income of the affordable housing applicant is equal to or exceeds 2.5 times the share or portion of the total monthly rent that the tenant shall be required to pay; multipliers based upon the total rent for the dwelling unit, including both the tenant's share of the rent and the subsidized portion of the rent, shall not be permitted; and
b. for all other dwelling units limited to occupancy by low or moderate income households, that the gross monthly household income of the affordable housing applicant is equal to or exceeds 2 times the amount of the monthly rent the household will be required to pay; provided, however, that the required amount of income needed if the applicant is certified as income eligible for a particular dwelling unit pursuant to the applicable provisions of the Uniform Housing Affordability Controls promulgated by the New Jersey Housing and Mortgage Finance Agency shall be in accordance with those provisions, or, in the case of an applicant with a disability, shall be the amount required in order to provide a reasonable accommodation pursuant to the "Law Against Discrimination," P.L.1945, c.169 (C.10:5-1 et seq.), the federal "Fair Housing Amendments Act of 1988," (42 U.S.C. s.3601 et seq.) or other applicable statute or regulation.
"Affordable housing applicant" means a low or moderate income household that possesses a State or federal tenant-based housing subsidy; or a household that applies to lease any rental dwelling unit that is restricted to occupancy by low or moderate income households pursuant to any State or federal affordable housing or subsidy program, including but not limited to the "Fair Housing Act," P.L.1985, c.222 (C.52:27D-301 et al.), and any low or moderate income housing mandated pursuant to a court order or settlement.
"Credit or other risk score or assessment" means a number or other form of rating that is derived from an algorithm, computer application, model, or other process that is based in whole or in part on credit information, court records or similar data, and which purports to characterize or categorize a person's creditworthiness, fitness to be a tenant, or other position or status. The term includes but is not limited to FICO or other credit scores, tenant scores, insurance scores or other enumerations. The term also includes the use of generic events or occurrences, such as a filing or discharge in bankruptcy, or being a named party in a court proceeding, as justification for denying a person credit or admission to an apartment or other rental dwelling.
"Creditworthiness" means the determination of a landlord or creditor, in accordance with section 4 or 5 of P.L. , c. (C. ) (pending before the Legislature as this bill), with regard to a prospective tenant's fitness to be a tenant or resident of a particular housing complex or dwelling unit.
"Deep rental subsidy" means a State or federal tenant-based housing subsidy, or State or federal project-based housing subsidy, which limits the tenant's share of the rental payment to a percentage of the tenant's income, and which can be adjusted to maintain that percentage should the tenant's income change.
"Low or moderate income household" means a household meeting the applicable State or federal definition of such households for the particular housing program or housing units in question.
"State
or federal tenant-based housing subsidy" means a tenant-based subsidy, enabled
pursuant to a State or federal tenant-based housing program available to low or
moderate income households, including but not limited to section 3 of P.L.2004,
c.140
(C.52:27D-287.3), commonly known as the State rental assistance program, or the
federal Housing Choice Voucher (Section 8) Program.
3. On or after the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill), a credit or other risk score or assessment calculated or disseminated by any entity shall not be used in any manner to evaluate the creditworthiness of an affordable housing applicant. A creditworthiness evaluation of an affordable housing applicant shall involve an individualized assessment conducted in accordance with the applicable provisions of sections 4 or 5 of P.L. , c. (C. ) (pending before the Legislature as this bill).
4. a. A rental housing application submitted by an affordable housing applicant with a tenant-based deep rental subsidy, or for a dwelling unit with a project-based deep rental subsidy, shall not be denied based on an assertion of lack of creditworthiness if the applicant has the ability to pay rent.
b. Notwithstanding the provisions of subsection a. of this section, an applicant so described may be rejected for lack of creditworthiness if, within the previous three years, and while in receipt of a tenant-based deep rental subsidy, or while residing in a dwelling unit with a project-based deep rental subsidy, the applicant failed on two or more occasions to pay the unsubsidized tenant share of the monthly rent in accordance with the rental agreement; provided, however, that, prior to making the decision to deny such an applicant, the landlord shall conduct an individualized assessment of the specific facts and circumstances surrounding the failures to pay. The individualized assessment shall include, but shall not be limited to, factors such as any disputes regarding the amounts of rent due, the accuracy of the calculations determining the tenant's share of the rent, and other relevant factors as they may be present. If the applicant had a bona fide reason for the failures to pay and subsequently paid all outstanding amounts owed as the tenant's share, then the applicant shall not be denied based on a lack of creditworthiness.
c. Rent discharged in a bankruptcy proceeding shall not be considered unpaid for the purposes of this section.
5. a. For all situations not covered by section 4 of P.L. , c. ( ) (pending before the Legislature as this bill), and unless standards more favorable to the applicant are mandated by other federal or State laws or regulations, a landlord proposing to evaluate the creditworthiness of an affordable housing applicant who has demonstrated an ability to pay rent, shall conduct an individualized assessment of the applicant's income, employment, and payment history. The individualized assessment shall include, at a minimum, an evaluation of the following factors: employment history and wage history, especially the amount of household income in relation to the cost of living in the region; rent or mortgage and utility payment history; health history, including any health issues affecting other members of the applicant household; the need for a reasonable accommodation in the case of a household which includes a person with a disability; and the extent to which the household developed a budget or payment plan that enabled it to meet most of its expenses most of the time, keeping payments of expenses as close to current as was reasonably possible, and considering the occurrence of unanticipated problems, and emergencies or other factors that significantly affected the household's ability to adhere to any such budget.
b. Notwithstanding any provision of subsection a. of this section to the contrary, for the purposes of evaluating the creditworthiness of an affordable housing applicant, there shall be a rebuttable presumption that an applicant household is creditworthy if: (1) the applicant household has demonstrated an ability to pay rent; (2) a member or members of the household has a history of regular employment or has been in receipt of another source of regular income; and (3) despite a household income that has been, for a period of time, below the self-sufficiency level as that term is defined under section 3 of P.L.1992, c.43 (C.34:15D-3) or was otherwise inadequate to meet its basic needs, the household made a good faith effort to meet its regular rent or mortgage obligations and other household expenses, and was able to do so most of the time.
c. Notwithstanding any provision of subsection a. of this section to the contrary, an affordable housing applicant who has completed a credit counseling or debt management course certified by the Department of Community Affairs shall be presumed creditworthy, provided that the applicant household has demonstrated an ability to pay the rent. A presumption of creditworthiness based upon the provisions of this subsection shall only be available on one occasion to any affordable housing applicant.
6. If a landlord denies a rental housing application from an affordable housing applicant, approves an application with conditions that exceed reasonable conditions routinely imposed upon a prospective tenant, or takes any other adverse action on an affordable housing applicant's rental housing application, the landlord shall provide a written notice of the adverse action to the applicant that states the reasons for the adverse action. The adverse action notice shall disclose any screening information about the affordable housing applicant accessed by the landlord, and shall append any screening report about the applicant that was accessed by the landlord. The adverse action notice shall be provided in a substantially similar format as set forth in this section, unless an alternative format is established pursuant to rules and regulations of the Attorney General. The adverse action notice shall include specific written findings as to each of the factors that landlords are required to consider as part of the individualized assessment. An adverse action notice that does not include a specific finding as to each factor or that does not consider the facts and circumstances relevant to the particular affordable housing applicant shall be deemed presumptively invalid and shall not constitute a lawful basis upon which to take adverse action against an applicant. All written notices required herein, including but not limited to the adverse action notice, shall be printed in both the English and Spanish languages and given to the affordable housing applicants. In any county in which the Language Access Plan of the Department of Community of Affairs indicates that five percent or more of the residents' primary language is any language other than English or Spanish, all written notices in that county shall also be printed in that additional language.
ADVERSE ACTION NOTICE
Name
Address
City/State/Zip Code
This notice is to inform you that your application has been:
..... Rejected
..... Approved, subject to the following conditions:
_______________________________________________________
Adverse action on your application was based, in part, on the following:
.....Information contained in a consumer report (The prospective landlord shall include the name, address, and phone number of the consumer reporting agency that furnished the consumer report that contributed to the adverse action.)
..... Information received from previous rental history or reference
..... Information received in a criminal record
..... Information received in a court filing or other court record
..... Information received from an employment verification
..... Other
The following is (are) the name(s), address(es), and phone number(s) of each of the consumer reporting agencies, or other agencies or entities, that furnished the reports or information referred to above:
_______________________________________________________
Your application was not accepted, or was approved with the additional conditions described above, for the following reasons (include specific facts and circumstances relevant to the particular applicant in relation to each of the enumerated factors that the owner/landlord is required to consider as part of an individualized assessment, as well as any other stated screening criteria): _______________________________________________________
Dated this ..... day of ........, ....(year)
Agent/Owner Signature"
7. Each landlord that denies, or takes any adverse action against, any affordable housing applicant for creditworthiness reasons shall be required to submit to the Attorney General, on an annual basis, a report that contains the following information for the preceding 12-month reporting period:
a. the number of applications for affordable housing reviewed over the preceding 12-month reporting period;
b. the number of denials of applications for housing rendered on the basis of creditworthiness reasons;
c. the number of denials to which the affordable housing applicant filed a complaint in Superior Court;
d. the number of denials that were overturned or found unlawful in Superior Court; and
e. the information required under subsections a. through d. disaggregated by the race of the applicant, the ethnicity of the applicant, the sex of the applicant, and whether the applicant had a disability.
8. a. In addition to the types of discrimination set forth in subsections g., h., i., j., l., and m. of section 11 of P.L.1945, c.169 (C.10:5-12), it shall constitute unlawful discrimination for a landlord to use a credit or other risk score or assessment, calculated or disseminated by any entity in any manner, to evaluate the creditworthiness of an affordable housing applicant in a way that violates the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill).
b. A person claiming to be aggrieved pursuant to P.L. , c. (C. ) (pending before the Legislature as this bill) may file a complaint or action with the Division on Civil Rights in the Department of Law and Public Safety, or in the Superior Court of New Jersey, alleging a violation of the "Law Against Discrimination," P.L.1945, c.169 (C.10:5-1 et seq.).
c. Following the receipt of a complaint the Director of the Division on Civil Rights in the Department of Law and Public Safety shall be authorized to prohibit the landlord from renting out the housing unit that the claimant applied for, pending the investigation of the claim.
9. The Attorney General, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), and in consultation with the Commissioner of Community Affairs, shall adopt rules and regulations to effectuate P.L. , c. (C. ) (pending before the Legislature as this bill) on or before the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill). The rules and regulations adopted by the Attorney General may restrict the application of the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill), if necessary to comply with federal law.
10. This act shall take effect on the first day of the third month next following enactment.
STATEMENT
This bill would supplement the "Law Against Discrimination," P.L.1945, c.169 (C.10:5-1 et seq.), to establish guidelines for determining the creditworthiness of applicants seeking to rent affordable housing units. The critical shortage of affordable housing in New Jersey has forced many low- and moderate-income households to reside in market-rate housing they cannot afford but must occupy to avoid homelessness. These struggling families and individuals are frequently left with less money than needed to meet other basic household obligations. Late or partial payments, as well as missed payments made up in subsequent months, are often the result. These undesirable but unavoidable decisions negatively affect the households' credit reports and inevitably lead to lower-credit scores. As a result, many in the State are coping with damaged credit.
Except in the specific circumstances provided in the bill, the bill would prohibit landlords from considering credit scores and other risk scores or assessments when determining the creditworthiness of a rental housing applicant who is the holder of a State or federal tenant-based housing subsidy. The bill provides that the consideration of negative credit history for such rental housing applicants would only be permitted if the tenant has, within the previous three years and while in receipt of a rental subsidy, failed on two or more occasions to pay the unsubsidized tenant share of the monthly rent in accordance with a rental agreement. Prior to making the decision to deny such an applicant, the bill would require the landlord to conduct an individualized assessment of the specific facts and circumstances surrounding the failures to pay. After a review of the circumstances, the holder of the State or federal tenant-based housing subsidy would still be deemed creditworthy if the tenant has a bona fide reason for late rental payments.
Regarding other applicants for affordable rental housing who do not hold State or federal tenant-based housing subsidies, the bill would only permit the landlord to assess the applicant's creditworthiness if the landlord also conducts an individualized assessment of the applicant's income, employment, payment, and credit history. The individualized assessment would include, at a minimum, an evaluation of the following factors: employment history and wage history, especially the amount of household income in relation to the cost of living in the region; rent or mortgage and utility payment history; health history, including any health issues affecting other members of the applicant household; the need for a reasonable accommodation in the case of a household which includes a person with a disability; and the extent to which the household attempted and was able to develop a budget or payment plan that enabled it to meet most of its expenses most of the time, keeping payments of expenses as close to current as was reasonably possible, and considering the occurrence of unanticipated problems, and emergencies or other factors that significantly affected the household's ability to adhere to any such budget.
Additionally, the bill would require that, for the purposes of evaluating the creditworthiness of an affordable housing applicant, there would be a rebuttable presumption that the applicant household is creditworthy if (1) the applicant household has demonstrated an ability to pay rent, as defined in the bill, (2) a member of the household has a history of regular employment or has been in receipt of another source of regular income, and (3) despite a household income that in the past was, for a period of time, below the self-sufficiency level or was otherwise inadequate to meet its basic needs, the household made a good faith effort to meet its regular rent or mortgage obligations and other household expenses, and was able to do so most of the time. An affordable housing applicant who has completed a credit counseling or debt management course certified by the Department of Community Affairs would also be presumed creditworthy, provided that the applicant household has demonstrated an ability to pay rent.
The bill further directs that, if a landlord denies a rental housing application from an affordable housing applicant, approves an application with conditions that exceed reasonable conditions routinely imposed upon a prospective tenant, or takes any other adverse action, then the landlord would be required to provide a written notice of the adverse action to the applicant. The adverse action notice would disclose any screening information about the applicant accessed by the landlord, and append any screening report that the landlord accessed. The adverse action notice would include the findings as to each of the factors that are required for consideration in the individualized assessment. An adverse action notice that does not include a specific finding as to each factor or that does not consider the facts and circumstances relevant to the particular applicant would be deemed presumptively invalid and would not be considered to constitute a lawful basis upon which to take adverse action against an applicant. The bill requires the notices to be printed in both the English and Spanish languages and given to the applicants. In any county in which the Language Access Plan of the Department of Community of Affairs indicates that five percent or more of the residents' primary language is any language other than English or Spanish, all written notices in that county would also be printed in that additional language.
The bill requires each landlord that denies, or takes any adverse action against, any applicant for creditworthiness reasons to submit to the Attorney General, on an annual basis, a report that contains the following information for the preceding 12-month reporting period:
(1) the number of applications for housing reviewed over the preceding 12-month reporting period;
(2) the number of denials of applications for housing rendered on the basis of creditworthiness reasons;
(3) the number of denials to which the applicant filed a complaint in Superior Court;
(4) the number of denials that were overturned or found unlawful in Superior Court; and
(5) a disaggregation of the information provided based on the race of the applicant, the ethnicity of the applicant, the sex of the applicant, and whether the applicant had a disability.
The bill allows a person claiming to be aggrieved pursuant to the provisions of the bill to file a complaint or action with the Division on Civil Rights in the Department of Law and Public Safety, or in the Superior Court of New Jersey, alleging a violation of the "Law Against Discrimination," P.L.1945, c.169 (C.10:5-1 et seq.). Following the receipt of a complaint the Director of the Division on Civil Rights would be authorized by the bill to prohibit the landlord from renting out the housing unit that the claimant applied for, pending the investigation of the claim.
The bill directs the Attorney General, and in consultation with the Commissioner of Community Affairs, to adopt rules and regulations to effectuate the bill on or before the first day of the third month next following enactment of the bill, which would coincide with the effective date of the bill.
