Establishes guidelines for creditworthiness determinations concerning affordable housing programs.

A1766

ASSEMBLY, No. 1766

STATE OF NEW JERSEY

222nd LEGISLATURE

�

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman ANTHONY S. VERRELLI

District 15 (Hunterdon and Mercer)

Assemblywoman VERLINA REYNOLDS-JACKSON

District 15 (Hunterdon and Mercer)

Assemblywoman TENNILLE R. MCCOY

District 14 (Mercer and Middlesex)

Co-Sponsored by:

Assemblyman Miller and Assemblywoman Brennan

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
.