This information about the Lease Application Approval Process only applies to properties listed by Birmingham Home Leasing (Birmingham Home Leasing [“Broker”] is a Registered Trade Name of Dean & Associates Inc). Please note that properties listed by other Brokers appear on BirminghamHomeLeasing.com. Lease Application Approval Standards vary from Broker to Broker.
Comprehensive Disclosure about Requirements
for Lease Application Approval
The Broker does not have any authority to approve a Lease Application. Lease Application Approval is the sole prerogative of the Owner. Generally speaking, once a Real Estate Broker publishes policies including Minimum Requirements for Lease Approval, it would be a violation of Federal Fair Housing Laws for the Broker to grant an exception to an Applicant if requested. With that being said, there is exception specified below, which is related to Applicants claiming inaccuracies in their Credit Report and/or Applicants claiming to be the victim of identity theft.
The Broker has the duty to decline any Application that does not meet the Owner’s prescribed objective criteria without presenting the Application to the Owner. The Owner prescribes objective criteria to the Broker for the purpose of evaluating Applications for issues including but not limited to: credit score, credit history, income ratios, debt ratios, etc. The objective criteria that the Owner prescribes to the Broker in the Rental Listing Agreement includes but is not limited to:
- All Applicants must have a U.S. Credit Report with a FICO Credit Score of at least 620 with at least 2 of the 3 Credit Bureaus (Models TransUnion FICO® Score 4, Experian FICO® Score 2, and Equifax FICO® Score 5). See policy for possible exceptions below at “APPLICANTS REPORTING THAT THEY DO NOT HAVE A SOCIAL SECURITY NUMBER” and “SPOUSES WHO HAVE A CREDIT FILE WITH NO CREDIT SCORE” and “APPLICANTS WHO MAY NOT HAVE A CREDIT SCORE WITH ALL 3 BUREAUS”.
- All Applicants must document a Rent to Income Ratio of no more than 31%. (Rent to Income Ratios calculated between 31.1% and 31.9% will be considered and approved or declined by the Owner only).
- All Applicants must document a Debt to Income Ratio of no more than 43%. (Debt to Income Ratios calculated between 43.1% and 43.9% will be considered and approved or declined by the Owner only).
- All Applicants must not have serious Active Account Delinquencies that total more than the amount of one month’s rent for the subject property. Active Account Delinquencies include but are not limited to:
- Active Past Due Accounts
- Charged Off Accounts (NOTE: It is commonly assumed that “Charged Off” Accounts are settled issues. This is not the case. All Charged Off Accounts remain collectible and subject to Judgment until notified of release by Creditor or Collection Agent.)
- Unpaid Collections
- Unsettled Judgments
- Active Liens
- Unsettled Deficiency Judgments on Short Sales or Foreclosures, etc.
- Both Spouses of married couples must apply. The Broker has a duty in the Rental Listing Agreement with the Property Owner to check credit scores, check for account delinquencies, and calculate “Joint” Rent to Income Ratios and “Joint” Debt to Income Ratios. This cannot be accomplished without the Broker seeing the credit report of both spouses. When one spouse of a married couple submits an Application and the second spouse does not complete the Application, the Broker will issue an “ADVERSE IMPACT NOTICE”.
- APPLICATION BY ONE SPOUSE WHEN A DIVORCE IS PENDING: Married couples finances are legally connected until a legal separation is effected by state statute, a Court Order is issued, a Legal Separation is adjudicated or a Divorce is finalized. The Broker may require an email from the Applicant’s Attorney confirming status. The Broker has a duty to check the credit score, check for account delinquencies, and calculate Rent to Income and Debt to Income Ratios for both spouses of a married couple until the two spouses’ assets and liabilities are legally separated. When one spouse of a married couple who is going through a Divorce applies (and it is unclear whether or not the two spouses’ assets and liabilities have been legally separated) and the second spouse refuses to apply, then the Broker will issue an “ADVERSE IMPACT NOTICE”.
- All Applicants must be able to qualify without the assistance of a Cosigner*.
- Both members of unmarried couples must individually qualify on the Rent to Income Ratio and the Debt to Income Ratio in order to both sign as a Tenant. A member of an unmarried couple can be named on the Lease as an Occupant, after submitting to a Background Review, if the other member can qualify for the Lease on Credit, Ratios, etc.
- Roommates must individually qualify on Credit, Ratios, etc. in order to sign the Lease as a Tenant. Unqualified Roommates can be named on the Lease as an Occupant after submitting to a Background Review.
- APPLICANTS CLAIMING THAT THEIR CREDIT REPORT CONTAINS INACCURATE INFORMATION AND/OR THEY ARE THE VICTIM OF IDENTITY THEFT: Consumers are responsible for knowing what is in their Credit Report and challenging inaccuracies with each Bureau if and when they are discovered. When the Broker issues an Adverse Action Notice because the Applicant does not meet or exceed the Objective Criteria prescribed by the Property Owner and the Applicant notifies the Broker, in writing, that they believe they have been a victim of identity theft or that there is inaccurate information in their Credit Report and they can provide documentation to support their claim, then the Broker will forward the documentation to the Property Owner for consideration. This policy should not be interpreted as providing an exception or a “loophole” to Applicants for the Owner’s Prescribed Objective Criteria for Lease Approval.
There are some issues that are difficult to define objectively. For that reason, subjective issues are left to the discretion of the Owner. The Owner’s discretion may not be absolute. It may be limited by applicable Law or the liability concerns of the Broker. These issues include but are not limited to:
- DOCUMENTATION OF EMPLOYMENT: The Owner instructs the Broker to request and collect proof of employment from the Applicant, however the Owner does not prescribe objective criteria to the Broker for the purpose of evaluating the material. The usual documents used for proof of employment are: pay stubs, employment letters, tax documents, etc. The Broker has no duty under the Rental Listing Agreement to “authenticate” employment documents provided by the Applicant. The Owner instructs the Broker to review the documents for obvious FTC defined “red flags” and report the results to the Owner. The documents presented by the Applicant are available to the Owner from the Broker upon request. The final decision about the Applicant’s current or future employment is the sole prerogative of the Owner.
- CREDIT UTILIZATION RATIO: The Applicant’s Credit Utilization Ratio from the Credit Report will be revealed to the Owner. The Credit Utilization Ratio calculates how much credit is available to the Applicant to use. According to online sources, a Credit Utilization Ratio at or below 35% is considered “good”. The Broker cannot find any thresholds for “average” or “poor” published online. The Owner may take the Applicant’s reported Credit Utilization Ratio into account at their discretion.
- DOCUMENTATION OF ADDITIONAL INCOME, LIQUID ASSETS, ETC.: The Lease Application allows for the declaration and documentation of additional income and/or liquid assets if the Applicant needs to use this to qualify on Rent to Income or Debt to Income Ratios. Property Owners will use their discretion to determine whether or not they want to rely on certain types of additional income.
- DOCUMENTATION OF INCOME FROM LEASED PROPERTY: Property Owners are not obligated to accept the Applicant’s additional income from Leases at “face value”. It’s not reasonable to assume that Leased property will have no rental loss due to vacancies in between Tenants or will not have maintenance and repair costs.
- IRS DOCUMENTS: The Owner instructs the Broker to request the Applicant’s most recent IRS filings. Any evaluation about the authenticity of the Applicant’s presented IRS documents or whether or not the Applicant has a Tax Liability that could adversely affect the Application is the sole prerogative of the Owner.
- RESOLVING “RED FLAGS”: The Broker’s only duty concerning “red flags” is to report possible “red flags” to the Owner. The final decision about how a possible reported “red flag” affects the Applicant’s Application is the sole prerogative of the Owner.
- BACKGROUND INVESTIGATION: The Owner instructs the Broker to conduct a Background Investigation on the Applicant and all adult occupants 19 and older. The Owner instructs the Broker to collect a copy of a Drivers License or Government Issued Photo ID from all children 16 and older. The Owner prescribes no objective criteria to the Broker for the purpose of evaluating the information in the Background Report including but not limited to: felonies, evictions, unlawful detainer, etc. The final decision on the Applicant’s/Occupant’s Background Report(s) is the sole prerogative of the Owner.
- APPLICANTS REPORTING THAT THEY DO NOT HAVE A SOCIAL SECURITY NUMBER: It is beyond the scope of the Broker’s duty and responsibility to investigate whether or not Applicants who report that they do not have a Social Security Number actually have a Social Security Number or not. Therefore when an Applicant reports that they do not have a Social Security Number, the Owner will decide whether or not to accept the Application.
- SPOUSES WHO HAVE A CREDIT FILE WITH NO CREDIT SCORE: In some cases, one spouse of a married couple may have a Qualifying Credit Score while the other spouse may not have a Credit File or a Credit File with a Credit Score. The decision on whether to accept a Joint Application from a married couple when one spouse does not have a Credit File or a Credit File with a Credit Score is the decision of the Owner.
- APPLICANTS WHO MAY NOT HAVE A CREDIT SCORE WITH ALL 3 BUREAUS: In some situations where an individual is beginning to build a credit history, they may not have a Credit Score with all 3 Bureaus. In this situation, the rule will be to be understood as no Credit Scores can be below the Minimum 620 required. The absence of 1 or 2 Credit Scores will not disqualify the Application unless the Broker’s Credit Report Vendor informs the Broker that the Applicant has “locked” 1 or 2 of their Bureau Reports. Locking Credit Bureau Reports shall be cause for declining a Lease Application.
*There is one “technical” exception to the no Cosigner policy. In the situation where a divorce is pending and the occupying spouse cannot qualify on income until the divorce is finalized, the other spouse may be required to sign the Lease in order to allow the occupying spouse to qualify. Since the non-occupying spouse will not occupy the premises after the divorce, technically this is cosigning.