Tenant Payment Performance Update through October 2022
We’re not aware of any other local management company sending their clients these types of updates! Please let us know if you hear of another company doing so. While it may be a little early, we did want to take the time to wish everyone a Happy Thanksgiving! We would like to thank you for your enormous support and well wishes in this time of gratitude. These past few years during COVID have been a rollercoaster ride. Thanks for always being with us. Happy Thanksgiving.
Please be sure to share this with anyone you know interested in real estate investing or looking for a better property manager, so they can see what they are missing!
We are excited to say that last month we executed 3 evictions in Detroit – yeah, that does seem a little weird being happy about bad news for someone else. We still have several more writs that are pending for courts to sign off on so we can execute them. This is great news as we’re finally seeing some positive movement in Detroit and Pontiac courts.
These two courts have been the worst with backlogs and nonstop adjournments when it comes to processing eviction cases. Courts are now starting to sign Writs a little more quickly, but the newest delay tactic is it takes longer for them to mail out a copy to us. We’ve figured out that we can call the court to confirm the writ was signed and obtain the bailiff´s contact information to schedule the eviction. More work for us, but we push evictions along faster!
Rumor has it that CERA officially ended on October 14th. However, we have noticed that cases that were filed before October 14th are still being processed and paid out. We have noticed the different agencies are taking even longer to process applications but they are still being processed. We have to continue to be patient.
As of now, what we know is CERA is not covering October rent and tenants have to pay rent in October even if their application is still in processing to avoid tenants falling further behind and being at risk of eviction. When processing eviction cases, the judges are asking the tenants if they have paid October rent and even warn tenants about the potential consequences. While judges are still very tenant friendly, this is a sign that they are hopefully moving in the right direction and will process eviction cases in a fairer matter.
Even though we heard the rumor that cases in Detroit were not going to be adjourned over and over again, it is still happening. In preparation for the holiday season, we have seen our cases get adjourned till January and February 2023 to either allow the tenants time to find a way to pay the balance or allow them time to move. When our attorneys ask the judges why they are adjourning the cases so far out – the judge’s response is that their dockets are simply that full. As we get further into the holiday season and the courts close for the holidays, we only expect that backlog to get larger.
GOVERNMENT AID FOR PAST-DUE TENANTS
Michigan shut down the CERA application website on June 30. Tenant applications will be processed until the program runs out of money. We are seeing more and more tenants having their CERA applications denied for various reasons.
We have noticed that the organizations processing CERA applications and disbursing funds are giving the runaround when it comes to disbursing the funds. We had a case where we were approved for assistance in June and the caseworker forgot to send the paperwork to the organization, even with our follow-ups every 3 days, and the organization is still trying to change the agreement when it comes to repairs to include more repairs than originally listed. We have still not received the CERA funds either.
While there are still other programs offering rental assistance, it’s our understanding that these programs are just as badly backlogged as CERA. This will only get worse with the holiday season as more tenants look for assistance. Please keep this in mind before recommending we research other programs for your past-due tenants.
TENANT APPLICANT SCREENING CHALLENGES
We continue to see different cases of application fraud. With each case we see, every applicant is becoming more creative with how they try to cover their fraudulent acts.
Tenants who are currently being evicted or recently evicted are trying to hide these by giving fake addresses or fake landlords. Why? Because they know the eviction may not show up on a background check.
When a tenant receives CERA for non-payment of rent, the courts enter a conditional dismissal. This document means the eviction is not on their record and does not show up when we pull our background check. Also, Legal Aid attorneys are negotiating deals that if the tenant vacates by a certain date, a conditional dismissal will be entered.
This makes it very challenging to get an accurate verification of rent payments for some tenants.
We also noticed a spike in income fraud. Tenants are providing fraudulent paystubs to claim they can make more than enough money to cover rent. However, when we compare this to their w-2 we can easily see that the document is fraudulent. We also try our best to get a verification of employment to see if the applicant works there or not and has the position, they may claim they have. While there are lots of companies that do not give out detailed information, they can usually tell us if that person is employed at the company or not.
Due to concerns about being accused of Fair Housing discrimination, and getting sued, we have to proceed carefully with every application we receive. As a result, it’s taking us longer to process each application.
RENT PAYMENT TRENDS 30-60-90+ Days Behind Update
We have seen a slight increase in the number of tenants paying full or partial rent. We believe this based on the courts informing tenants that they need to pay October rent to avoid eviction. While this may not cover the full balance the tenants owe, it is a nice development.
We saw a sharp increase in the number of tenants who paid rent for the month of October. We saw more tenants pay either full or partial rent to avoid eviction. This is a trend we hope to see as we enter into the holiday season.
We saw a slight decrease in the number of tenants paying full rent which did force us to start a few more eviction cases. However, with most courts processing evictions at a normal rate, we should be able to either get those tenants to pay or evict them.
We are extremely excited to say that we have seen a sharp increase in the number of tenants paying full rent – finally! We have seen more tenants taking into consideration the warning CERA caseworkers and the judges have given to tenants about not paying October rent. We hope more tenants continue to pay as they can see an eviction is possible.