May 24

I was invited by TMJ4 to talk about the end of the WI eviction moratorium on Friday. I cannot find a link to the show, but here are my notes and a picture from when my granddaughter happened to catch the broadcast when she was watching tv. It must have been one of her homeschooling assignments. 😉

My notes for the interview. Unfortunately I was not able to make all my comments.

How are you working with tenants?

Most important is communication. Tenants need to talk to their landlords. The sooner the better.

Our company has posted a list of resources for tenants on our website at:
ApartmentsMIlwaukee.com/r/  

Despite dire predictions by attorneys for Legal Action, we do not anticipate a large increase in overall evictions.

What may be surprising to some, rental owners do not like evictions. It is in both parties best interest for a resolution.  Successful landlords need successful tenants. Every eviction is costly to landlords in terms of lost rent and often damages.  Evictions are costly to tenants as it impacts their future housing and is disruptive to their lives.

If tenants have resources to pay rent, then there will be no eviction crises when the moratorium is lifted.  Governor Evers just announced $25M Wisconsin Rental Assistance Program will go a long ways to providing those resources and preventing many evictions.  

Most owners did not charge late fees for April, well before the prohibition against late fees was issued.  

We are seeing greater than 85% of tenants have paid their rent in full for April and May and generally timely.

As would be expected, some tenant took advantage of the moratorium and did not pay rent when they had an ability to do so.  Many people are in better financial position today than they were three months ago due to the enhanced federal unemployment and stimulus money.  

Our company and many other landlords are working with Mediate Milwaukee to attempt to resolve some of these issues without filing for eviction.

Are you worried about how the rest of the year looks?

Absolutely. Landlords need to collect their rents in order to survive. If landlords do not survive, tenants and municipalities suffer.

The real fear is, unless something dramatically changes, that August and September will be far worse due to the expiration of the enhanced federal unemployment, the stimulus money being spent, and those employers who received the SBA Payroll Protection Program grants will no longer be required to keep those employees.

Any substantial disruption in rent collections will cause an impact on not only the property owners, but also on future rental housing costs.

Milwaukee and other communities have recently furloughed employees due to COVID’s impact on their budget.  This comes well before we will see the impact of COVID on payment of property taxes, sewer and water and reductions in collections of other city fees.    

We can look at  2008 and see how that impacted Milwaukee’s housing for years after. The City ended up foreclosing on hundreds of properties, with many having been vandalized to the point they were razed.  Milwaukee continues to have a huge number of tax foreclosures today, even in what was one of the best economies in history. It will only get worse now due to COVID.  This is not only a burden to the cities but also reduces future housing choices for tenants.

Picture of one of Sherrena (from Desmond’s EVICTED) properties on 10th & Center that was foreclosed upon shortly after the 2008 crises.  It burned in April 2018 and was finally razed in November 2019. (Photo by Heiner Giese)

There are predictions that the COVID housing impact will be far worse than the Great Recession. The 2008 bubble was predictable and the build up to it was over a couple of years.  Many people in the housing industry realized the prices of real estate at the time was unsustainable and those people were not harmed. 

COVID brought the economy to a sudden and unpredictable stop.  No one was prepared, and many businesses will not return.  

What resources are available to landlords?

Not many.

Landlords with very specific mortgages may forgo payments, but interest may still occur.  Mortgages are only a fraction of the operating costs.  Nearly an equal amount is paid to the municipalities in taxes, sewer, water, and other fees.  Maintenance is a large portion of the owners’ expenditures as is insurance and other operating costs.

Here is an infograph from the National Apartment Association:

May 24

The NY Mag has an excellent, sorry depressing, article about “Dr. Doom” Nouriel Roubini prediction of an extended depression.

In September 2006, Nouriel Roubini told the International Monetary Fund what it didn’t want to hear. Standing before an audience of economists at the organization’s headquarters, the New York University professor warnedthat the U.S. housing market would soon collapse — and, quite possibly, bring the global financial system down with it. Real-estate values had been propped up by unsustainably shady lending practices, Roubini explained. Once those prices came back to earth, millions of underwater homeowners would default on their mortgages, trillions of dollars worth of mortgage-backed securities would unravel, and hedge funds, investment banks, and lenders like Fannie Mae and Freddie Mac could sink into insolvency.

His predictions for 2020 are far more dire

A decade later, “Dr. Doom” is a bear once again. While many investors bet on a “V-shaped recovery,” Roubini is staking his reputation on an L-shaped depression. The economist (and host of a biweekly economic news broadcastdoes expect things to get better before they get worse: He foresees a slow, lackluster (i.e., “U-shaped”) economic rebound in the pandemic’s immediate aftermath. But he insists that this recovery will quickly collapse beneath the weight of the global economy’s accumulated debts.

Go read the article

May 14

My life is too exciting, so I skimmed through the HERO ACT proposal hoping the 1,815 page document would put me to sleep  Unfortunately it did not.
https://docs.house.gov/billsthisweek/20200511/BILLS-116hr6800ih.pdf

Cliff Notes version:
No late fees, scheduled repayment periods, no evictions for a year, extra Rent Assist and emergency assistance, ten times penalties for violations.  Bad for landlords and mortgage providers

[P]age 934 [L]ine22 
SEC. 110201. EMERGENCY RENTAL ASSISTANCE.
(a) AUTHORIZATION OF APPROPRIATIONS.—There is 24 authorized to be appropriated to the Secretary of Housing and Urban Development (referred to in this section as the ‘‘Secretary’’) $100,000,000,000 for an additional amount for grants under the Emergency Solutions Grants program under subtitle B of title IV of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11371 et seq.), to remain available until expended (subject to subsections (d) and (n) of this section), to be used for providing short or medium-term assistance with rent and rent-related costs (including tenant-paid utility costs, utility- and rent arrears, fees charged for those arrears, and security and utility deposits) in accordance with paragraphs (4) and (5) of section 415(a) of such Act (42 U.S.C. 11374(a)) and this section.

P 961 L5
SEC. 110203. PROTECTING RENTERS AND HOMEOWNERS FROM EVICTIONS AND FORECLOSURES.

(b) MORATORIUM.—During the period beginning on the date of the enactment of this Act and ending 12 months after such date of enactment, the lessor of a covered dwelling located in such State may not make, or cause to be made, any filing with the court of jurisdiction to initiate a legal action to recover possession of the covered dwelling from the tenant for nonpayment of rent or other fees or charges.

All rentals are covered, not just those with Rent Assist or Federal backed mortgages :P966 L1

(1) COVERED DWELLING.—The term ‘covered dwelling’ means a dwelling that is occupied by a tenant

(A) pursuant to a residential lease; or

(B) without a lease or with a lease terminable at will under State law.

P1004 L16
(b) TENANT-BASED SECTION 8 RENTAL ASSISTANCE.—There is authorized to be appropriated for an additional amount for fiscal year 2020 for the tenant-based rental assistance under section 8(o) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o))  $3,000,000,000, to remain available until September 30, 2021, of which not more than $500,000,000 may be used for administrative fees under section 8(q) of such Act (42 24 U.S.C. 1437f(q)).

P1037
SEC. 110402. RESTRICTIONS ON COLLECTIONS OF CON2 SUMER DEBT DURING A NATIONAL DISASTER OR EMERGENCY.


(1) COVERED PERIOD.—The term ‘covered period’ means the period beginning on the date of enactment of this section and ending 120 days after the end of the incident period for the emergency declared on March 13, 2020, by the President under section 501 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 4121 et seq.) relating to the Coronavirus Disease 2019 (COVID-19) pandemic.

P1038
(1) IN GENERAL.—Notwithstanding any other provision of law, no debt collector may, during a covered period—

P1039
(D) commence or continue an action to evict a consumer from real or personal property for nonpayment;

P1040
(e) VIOLATIONS.—Any person or government entity that violates this section shall be liable to the applicable consumer as provided under section 813, except that, for purposes of applying section 813

(1) such person or government entity shall be deemed a debt collector, as such term is defined for purposes of section 813; and  

(2) each dollar figure in such section shall be deemed to be 10 times the dollar figure specified.

May 12

The AASEW has done a lot of great things for the industry and sustainable rental housing.

One that benefited many owners was the change to Sheriff moves to eliminate the mover, which is a large portion of the costs.  

Our attorneys, working against their own personal interest, changed the law to allow LLCs to be represented by a member or agent, rather than requiring an attorney. This saves a lot of money as well as making the case less confrontational.

Here are the laws passed through the work of the AASEW in:

2018  https://bit.ly/3bryZ0Y
2016  https://bit.ly/2Lj7NXM
2014  https://bit.ly/3dCRRM1
2012  https://bit.ly/2zx3NQZ

It is important that we work together as an industry for the betterment of all.

May 10

A little off-topic, but well worth the hours to listen to it.
https://www.tropicalmba.com/china-perspective-coronavirus-outbreak/

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