HUD Issues Fair Housing Act Guidance on Use of Artificial Intelligence

person A.J. Johnson today 05/11/2024

On May 2, 2024, the Department of Housing & Urban Development (HUD) released two guidance documents addressing the application of the Fair Housing Act (FHA) to two areas in which the use of artificial intelligence (AI) poses particular concerns: the tenant screening process and its application to the advertising of housing opportunities through online platforms that use targeted ads. This guidance follows an Executive Order from President Biden that required HUD to provide guidance to combat discrimination enabled by algorithmic tools used to make leasing decisions.

This guidance clearly states that the FHA applies to tenant screening and housing advertising, including when AI performs these functions.

The tenant screening guidance describes fair housing issues created by tenant screening practices, including the increasing use of third-party screening companies to aid tenant screening decisions and the emerging use of machine learning and AI. The guidance also suggests best practices for fair, transparent, non-discriminatory tenant screening policies for housing providers and companies offering tenant screening services.

Housing providers and tenant screening companies are crucial in ensuring that tenant screenings are transparent, accurate, and fair. The tenant screening guidance underscores that the use of third-party screening companies, including those that use AI or other advanced technologies, must comply with the FHA. It also emphasizes the importance of ensuring that all housing applicants are given an equal opportunity to be evaluated on merit, making you feel responsible and accountable for fair practices.

Advertisers and online platforms should be acutely aware of the risks of deploying targeted advertisement tools for ads covered by the FHA. Violations of the Act can occur when certain ad targeting and delivery functions unlawfully deny consumers information about housing opportunities based on their protected characteristics. Similarly, violations can occur when ad targeting and delivery functions are used, based on protected characteristics, to target vulnerable consumers for predatory products or services, display content that could discourage or deter potential consumers, or charge different amounts for delivered advertisements. This highlights the need for caution and strict adherence to the FHA.

Owners and managers using third-party screening services for applicant selection should carefully review this new HUD guidance. I will provide future articles analyzing both the screening guidance and the use of online platforms.

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Navigating Fair Housing in Digital Advertising - Ensuring Non-Discriminatory Ad Delivery

Introduction: The U.S. Department of Housing and Urban Development's Office of Fair Housing and Equal Opportunity has released crucial guidance on how the Fair Housing Act applies to digital advertising in the housing and real estate sectors. With the increasing use of automated systems and artificial intelligence (AI) in ad targeting and delivery, it is essential to understand the potential risks of discriminatory practices and take proactive measures to ensure fairness. Understanding the Risks: It's crucial to grasp how new technologies enable advertisers to target specific audiences while excluding others, potentially leading to discrimination in housing-related ads. The Fair Housing Act prohibits discrimination based on protected characteristics such as race, color, religion, sex, national origin, familial status, or disability. By understanding these risks, you can proactively ensure fairness and avoid potential legal issues. Discriminatory ad targeting can manifest in various ways, including denying information about housing opportunities, targeting vulnerable consumers for predatory products, discouraging potential consumers, and steering home-seekers to specific neighborhoods. Audience Targeting Tools: Ad platforms offer audience categorization tools that segment potential audiences based on various characteristics like gender, age, income, and location. While these tools can be useful, they can also lead to discrimination if used to exclude or target specific groups based on protected characteristics. Advertisers and platforms should be cautious when utilizing these tools for housing-related ads and avoid segmenting audiences based on protected characteristics or proxies. Custom and Mirror Audience Tools: Custom and mirror audience tools allow advertisers to target specific audiences or find similar audiences based on existing data. However, if protected characteristics limit the source audience, these tools can perpetuate discrimination. Advertisers and platforms should carefully analyze the composition of source lists and ensure they are not unjustifiably limited based on protected characteristics. Regular audits of ad delivery outcomes can help identify and mitigate discriminatory practices. Algorithmic Delivery Functions: Ad platforms employ machine learning and AI to determine which ads are delivered to consumers. However, these algorithmic delivery functions can also result in discriminatory outcomes. Ad platforms should ensure their algorithms do not direct housing-related ads based on protected characteristics, leading to steering, pricing discrimination, or other discriminatory practices. Regular testing and adjustments are necessary to minimize disparities and ensure fairness. Recommendations for Advertisers and Platforms: Advertisers need to utilize platforms that actively manage the risk of discriminatory practices to ensure non-discriminatory ad delivery. Ad platforms, on the other hand, play a crucial role in this process. They should create separate processes for housing-related ads, avoid targeting options based on protected characteristics, conduct regular testing, adopt less discriminatory alternatives for AI models, ensure fair pricing practices, and maintain transparency through documentation and auditing. Ad platforms can contribute significantly to fair housing practices by fulfilling these responsibilities. Conclusion: By diligently following the guidance provided by the U.S. Department of Housing and Urban Development, advertisers and ad platforms can contribute to fair housing practices and mitigate the perpetuation of discrimination in digital advertising. This commitment to fairness ensures compliance with the law and fosters a more inclusive and equitable digital advertising landscape. It is crucial to be aware of the risks, implement proactive measures, and work towards non-discriminatory ad delivery to ensure equal access to housing opportunities for all.

Maximize Efficiency and Savings - Sign Up for HUD's Energy and Water Benchmarking Service for Multifamily Properties

HUD recently provided information on its Energy and Water Benchmarking Service, available for sites participating in HUD s Multifamily project-based rental assistance programs. The free service provides participating owners with data on energy and water consumption at their sites. While up to 9,000 properties are eligible for the service, it's concerning that only just over 700 properties have taken advantage of this opportunity. I encourage all eligible property owners to sign up for the Energy and Water Benchmarking Service to ensure they are not missing out on this valuable resource. The Green and Resilient Retrofit Program (GRRP) is a game-changer, offering over $800 million in grant funding and $4 billion in loan commitment authority. It is the first HUD program to invest in energy efficiency, renewable energy generation, climate resilience, and low-embodied-carbon materials in HUD-assisted multifamily housing. This program presents a significant opportunity for property owners to improve their properties and potentially gain financial benefits. Provided Data Leads to Actionable Improvements The service's data is not just numbers but a practical tool that helps owners identify opportunities for energy efficiency improvements. These improvements can benefit residents and promote green investment in individual properties or entire portfolios. Once the data is provided, owners can confidently use it to apply for GRRP grants and loans, knowing they are making informed decisions based on real data. Offers annual property analysis reports identifying usage trends and energy and water savings opportunities. Establishes eligibility for or prepares owners to use federal, state, and utility energy efficiency programs. It supports early compliance with local ordinances as more localities across the country become interested in the energy usage data of multifamily properties. Provides technical assistance, training, and other resources. When an owner signs up for the service, they will receive personalized support in assessing the efficiency of their buildings for up to four years. HUD s contractor, Leidos, will support property owners and management by contacting utilities to access the necessary energy and water use data and provide cost and energy savings recommendations. Registration Information There is no deadline for signing up for the service, but limited funding is available. Owners who delay signing up for the service may miss the opportunity or not be able to take advantage of the full four years of the initiative. Owners and managers interested in the program should email their interest and the property ID(s) to mfbenchmarking@hud.gov.

Webinar Announcement: Tenant-on-Tenant Harassment in Multifamily Housing

A.J. Johnson will host a pivotal webinar titled "Tenant-on-Tenant Harassment in Multifamily Housing: Navigating the Challenges" on June 20, 2024, from 1:00 PM to 2:00 PM Eastern Time. Webinar Overview This essential webinar addresses the pressing issue of tenant-on-tenant harassment in multifamily housing properties. The session will provide property managers and landlords with the knowledge and tools to handle these conflicts effectively, ensuring a safe and respectful living environment for all residents. The webinar will cover the legal implications of harassment, preventative measures, and practical strategies for managing tenant interactions. Key Topics Understanding Harassment: Learn the definitions and examples of tenant-on-tenant harassment. Legal Framework: Gain an overview of the laws and regulations that protect tenants from harassment. Roles and Responsibilities: Understand what landlords and property managers can and should do when faced with tenant complaints. Who Should Attend This webinar is ideal for: Property Managers Landlords Real Estate Professionals Tenant Advocates Legal Professionals Registration Interested participants can register for the webinar on the A.J. Johnson Consulting Services website under the "Training Schedule" section. For more details and to secure your spot, visit www.ajjcs.net. Don't miss this opportunity to enhance your understanding and management of tenant-on-tenant harassment in multifamily housing. Register today to ensure your residents a safer and more harmonious living environment.

HUD Proposes Comprehensive Changes to HOME Rules

On May 15, 2024, HUD published a preview of a Notice of Proposed Rulemaking proposing significant changes to the HOME Program. The proposed rule is expected to be published in the Federal Register before June, and public comments are due no later than 60 days after that publication. The proposed rule would make changes in many areas: Community Housing Development Organization (CHDO) Requirements: Major revisions to CHDO requirements are proposed to streamline processes and improve efficiency. HOME Rents Approach: A new methodology for setting HOME rents is being introduced to better align with current housing market conditions. Small-Scale Rental Projects: Requirements for small-scale rental projects will be simplified, making it easier for developers to comply. HOME Tenant-Based Rental Assistance (TBRA) Programs: The proposed changes will provide greater flexibility in TBRA programs, allowing for more effective tenant support. Community Land Trusts (CLTs): New flexibilities and simplified provisions are being proposed to encourage their use and effectiveness. Tenant Protections: The rule would significantly strengthen tenant protections by mandating a HOME tenancy addendum with a uniform set of protections to be included in leases of all HOME-assisted rental housing units. For tenants receiving TBRA, a streamlined set of protections will be required. Advanced Property Standards: HUD proposes incentives for meeting higher property standards incorporating green building practices, enhanced energy efficiency, and innovative construction techniques for new construction, reconstruction, and rehabilitation projects. Homeownership Housing Resale Requirements: Clarifications to resale requirements for homeownership housing are included to ensure transparency and consistency. Technical Amendments and Simplifications: The proposed rule will make technical amendments and simplifications to align with the changes introduced in the 2013 HOME Final Rule. These proposed changes are part of a broader effort to modernize and improve the HOME program, incorporating updates from the Housing Opportunity Through Modernization Act of 2016 (HOTMA), the Economic Growth Regulatory Relief and Consumer Protection Act, and the National Standards for the Physical Inspection of Real Estate (NSPIRE) Final Rule. Additionally, the rule updates citations to align with recent changes to the Office of Management and Budget (OMB) regulations at 2 CFR part 200. HUD plans to publish further rulemaking to ensure consistency across all regulations. The proposed changes are detailed in the Proposed Regulation, with further revisions anticipated following the implementation of the HOTMA and NSPIRE Final Rules. While all the proposed changes are important, I will publish a series of articles in the weeks ahead outlining the proposed changes in four specific areas: (1) HOME Rents, (2) Small Scale Rental Projects, (3) Tenant Protections, and (4) Advanced Property Standards.

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