Having well-documented screening criteria that describes the process of arriving at an up or down decision on a rental application is critical for being objective and for defending oneself in a discrimination complaint. But, does your criteria allow for people-specifically those who have lost their home due to foreclosure-to be considered as a renter in certain cases? Are they a good risk? Well, maybe according to Ron Massey, CEO of
rentalhouses.com The ideal scenario is when applicants are simply between homeownership due to employment relocation or because of a temporary move to a city. But in the case of foreclosure being listed on an application, a red flag certainly flashes before us. The best case for this category of renters occurs when other credit has been responsibly handled. Even in this situation, in a strong market it may be ill-advised to take the risk.
Your written screening criteria should indicate whether or not other good credit histories are enough to overcome the risk resulting from a foreclosure; but again, the condition of the rental market in your area should factor into whether or not your criteria needs to be adjusted to take this into account.
It makes sense during these record-high rates of foreclosure that some consideration is given to this group of people so long as their other credit has been responsibly handled and your rental market is not extremely strong.
It may be necessary to reduce the negative impact of foreclosure in your screening criteria for these people to make the grade. Also give serious consideration to requiring an additional deposit for people in this situation. If you have to alter your screening criteria, be sure and document it along with the effective date of the change.