CDC Moratorium Extended Yet Again . Is This The New Normal?

Question

Hello BP!

The CDC stated that July 31st was the last extension of the moratorium and many states had already moved in that direction. I personally thought that this was a once an a lifetime event and the end was finally near.

Then the announcement of yet another extension of the CDC eviction ban came last night. It's more "targeted" this time, and aims to protect renters in areas hit hardest by the delta variant. I've now started to doubt myself that this is truly the end.  We might not ever see another outright ban on evictions again, but what other restrictions of property rights might be enacted in the future during times of economic stress? This in my opinion is no longer about COVID. While COVID is certainly a serious health issue, many people have adapted and moved on. This is a deeper rooted issue regarding housing affordability and history of resentment towards landlords/housing providers that started long before COVID.  This isn't going away in the next few years.

Over the past year and half I have learned that I need other tools to encourage good behavior besides the threat of eviction. I now subscribe to a credit reporting site that will allow me to report late payments. As long as you screened right, most tenants complied with the terms of their lease despite the national and local moratoriums. For those that choose not to, I now have one more tool that I can use to point them in the right direction.

Due to all the events that have happened are you positioning yourself differently going forward? Are you increasing your criteria? Looing at different markets or investment strategies?

Eric James · Answer

This is no longer an investment issue. It's a constitutional crisis when the executive branch thumbs it's nose at the judicial branch. What remains to be seen us if the supreme court will take this lying down.

Sean McKee · Answer

@Eric James I couldn't agree more. They know it will take months for it to get before the supreme court. This will buy them the time they need. I think we need a definitive answer from the Supreme Court that can hopefully end this back and forward argument. I sincerely hope they pick the pace up with distributing rental assistance.

Dick Rosen · Answer

I don't think we'll see any positive changes until this current administration is taken out of DC.

We manage about 100 doors in the Phoenix market and honestly we haven't had too much concern about CDC and their moritoriums. We tightened up our screening process, stayed aligned with NARPM members and our attorneys and we are doing okay. We've had a couple of evictions and yes they did go through, took a little longer but my attorney knows how to get things done.

Sean McKee · Answer

@Dick Rosen I'm glad it wasn't that bad in Phoenix.  Illinois 's ban was more strict than the CDC's.  You couldn't get even evict squatters, hold overs, or people materially violating their lease. I had one tenant in May just refuse to pay because I wouldn't renew her lease. Lucky I caught the tail end of the moratorium in Illinois, and she conveniently left after 2 months.

Sean McKee · Answer

@John Underwood The name is Landlord Credit Bureau . As of right now they only report to Equifax.  Your tenants have the option to opt in. If they don't opt in it won't report their payments. However if they pay late, you can activate it and will open a trade line with Equifax. From that point on their payments will be reported. They will send out emails on your behalf.  They are relatively new, founded in 2012. There are still situations in which collections agencies will be better suited(ie. they won't let you report damages). I think Experian also had a program that allows credit reporting, but I have not researched it.  I wish I had a better understanding of both credit reporting and collection agencies before I had an issue.

Sean McKee · Answer

@Jonathan Klemm- I didn't read the exact details, at this point I'm beyond exhausted with all the extensions.  To my knowledge it is not actually that targeted as it still covers 85 to 90% of US. But it prevents evictions for nonpayment of rent in counties with high transmission rates of the delta variant.  If the rates drop below a certain threshold for two weeks, the protections go away.  I think this was the general concept. The point is it's still very broad and was definitely a stall tactic.

I oddly have not had an takers on signing up with Landlord Credit Bureau.  But I had a number of people start paying a few days early and reaching out to make sure payment was received. The nice thing is you don't need them to opt in to start reporting if they pay late.

I definitely did not make it through COVID unscathed, but I was able to avoid having tenants go 13 months without paying. I had issues with 2 units and they both left after a couple months. My properties are in C Class areas (Cicero and Little Village). Given that Class C and below took the brunt of the delinquent tenants, I consider myself very lucky. My fingers are crossed this ends in the next few months.

Sean McKee · Answer

@Dientse Tsai I came to the exact same conclusion. I literally found it by luck, I had almost given up when I stumbled a crossed it on Google.  The only other way I know to credit report "directly" is by sending it to collections.   Which frankly won't have the same kind of impact as Landlord Credit Bureau has, since LCB is an actual trade line.  So I believe your company name will show up and it shows if they paid late or are past due.  Collections goes in a different section, and shows up under the debt collectors name. So future creditors might not know exactly what the debt is for.

I hope they can get their name out there more.  If COVID had not happened, I probably would not searched as hard as I did. I can't say for certain, but I suspect it would have saved me thousands of dollars if I had it implemented earlier.

Dientse Tsai · Answer

I use Landlord Credit Bureau as well. From all my research, this is the ONLY agency that will insert negative/missed payment info onto a tenant's Equifax credit report. All the other rent reporting services will ONLY report positive rent history, never negative. I called at least 4 different companies. Credit bureau themselves advertise that they work with a handful of companies that do rent reporting. But LCB is not on any credit bureau's official partner list. That is why I started using LCB. I cut and pasted the exact legal language from LCB into my lease agreement and rental agreement. Tenant agreed to it and that is that. Just my feedback FWIW. Thank you for other members who chimed in on this topic.

Dientse Tsai · Answer

@Sean McKee. And everyone else. LCB proactively send out a rent reminder email every month about 5 days before the 1st. For some reason, my tenant starts paying me around the 25th of the month.

Going forward every tenant agrees to LCB participation and reporting. Rental application wilL have LCB legal language built in. Dont like it? No need to apply. Saves everyone time.

Luckily my last tenant did not stop paying during the pandemic. He needed to buy a house so he cant afford to have his credit blemished. My current tenant went into this agreeing to LCB reporting. Fingers crossed.

For those who have balances owed, having LCB going after them letting the non-paying ex-tenant know that their credit can be wrecked. Another BP post said that it was effective.

CDC Moratorium Extended Yet Again . Is This The New Normal?

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