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| Topics and Issues | "Junk Fees" (3) |
In March 2023, U.S. Department of Housing and Urban Development (HUD) Secretary Marcia L. Fudge wrote an open letter about “junk fees” in housing. She noted that
In a rental market where prospective renters often apply to several units, non-refundable application fees present a financial burden for many applicants, particularly people with low incomes. When renters are charged even modest rental application fees for multiple units, the costs can quickly add up to hundreds or even thousands of dollars. Research also shows that renters of color are more likely to be charged application fees and to be charged higher fees compared to white renters.
Landlords typically use application fees to pay for tenant screening reports, and these reports may have inaccurate information and questionable validity in predicting renter behavior. If prospective renters are not given the opportunity to review and correct the information in these reports, then these renters may end up paying numerous application fees only to be repeatedly rejected for this inaccurate information in their tenant screening reports.