Update to City of Portland relocation fees for renters

 Hey All, a quick update for landlords (hate that term) and renters in the City of Portland. City Council just passed a temporary amendment to the "renters' relocation assistance policy".  

Previously, if a landlord increased rent (given 90 days notice) by 10% or more, and if the tenant said they couldn't afford that increase, the landlord would pay the tenant relocation assistance in relation to the number of bedrooms in the rental unit.  In general, these fees were between $2900 and $4500.

As of yesterday, and until March 31, 2021, these same relocation fees will apply to any rent increase, no matter how small.  If you are a landlord, and have already given your tenants notice of a rent increase, you may rescind that notice (in writing) to avoid being subject to the fees. 

There is also currently a statewide moratorium on evictions for unpaid, or partially paid rent.  Tenants have six months, from the expiration of the moratorium to pay any owed rent.  The moratorium is set to expire on September 30th, giving tenants until March 31 to pay any owed back rent.  While there is not a moratorium on evictions for other violations of the lease/rental agreement, eviction courts have been understandably reluctant to evict during the pandemic. 

City data shows Portland has approximately 264,000 households, with 47% of those being renters.  43% of white household rent, and 74% of Black households rent.  Health issues and financial hardship from COVID have disproportionately affected Black households.  This move by the City Council was meant, in part, to lessen the impact of COVID on the city's Black community. 

Might as well talk about earthquakes.

I am NOT an expert on earthquakes and old foundations, but I do know a few things.  And I've attended a few classes that taught me things.

First, an ever so brief history.  In Portland, our old houses were built on concrete foundations made of cement combined with river rock and sand.  The aggregate (rocky stuff) was not washed, and thus the cement mixture didn't adhere well, and there were often larger rocks and gravel.  These foundations were usually covered with a skim coat to protect the foundation and for a more uniform look. By the late 1930's and in part due to construction as a result of the war, concrete foundation practices improved greatly.  Not all builders adopted the new fangled ways quickly, so it really wasn't until the early 1940's that the quality of foundations was consistently better. 

When looking at an old foundation, here are a few tips.  If you can see lines on the concrete the width of lumber, you are most likely looking at the actual foundation, the lines being the imprint of the form boards for the foundation.  If it is smooth, with no lines, you are most likely looking at a skim coat, covering the actual foundation.  A weak foundation can have a pretty skim coat. An awful foundation will most likely have a peeling or failing skim coat.   And, just because you see metal ties and braces at the structural beams and supports, don't assume all is good.  Or in other words, beware of pretty hardware.

Vertical cracks in a foundation aren't thought to be an issue.  Horizontal cracks can lead to a hinging effect, where the foundation (in an earthquake) folds on itself.

With a higher quality foundation one has the option to tie the house to the foundation.  And there are some decent pre-1940's foundations as the timeline is an estimate.   Best practice is to have a core sample tested; looking for 2000psi strength or better, to justify the retrofit of tying the foundation to the house.  The foundation core test costs around $1000.

If the foundation is found be in good enough shape, tying the house, to the perimeter foundation AND installing bracing/tying hardware to the support posts and beams can be a good way to go.  Even better would be to also install some braced wall panels and continuous sheathing mentioned below.

If the core sample shows a poor foundation, replacement may be your best option.  Constructions costs vary, but the  average cost of a new foundation , 120 linear feet, would be about $80,000.  As often is the case with remodel projects, beware of the "while we are at it" budget. "While we're putting in that new foundation, let's add a bathroom down there and at least provide for a future apartment". 

If $80,000 seems a bit high, at least consider installing an earthquake valve at your gas meter.  This valve, when it experiences shaking, will automatically close the gas line. Remember, the 1906 San Francisco quake didn't do all that much damage.  It was the fires that came after.  The gas line valve is a very inexpensive fix, and can prevent a lot of harm. They cost somewhere around $500. 

In 1976, building codes were written to include attaching the house to the foundation, and other stabilization techniques.  These were primarily about the affect of wind on a building.  It wasn't until 1998 that building codes addressed earthquakes and foundations.  The Loma Prieta Quake, which hit Central and Northern California in 1989 and the Northridge quake, which hit Southern California in 1994 provided plenty of field data leading to the 1998 code changes.  The Loma Prieta quake especially, contributed to the "prescriptive path" method of "earthquaking" buildings.  This approach uses braced wall panels, continuous sheathing AND tie down anchors to help a building resist both wind and earthquakes.   Wind often brings lift, or vertical forces to a structure, whereas most earthquakes bring lateral forces.  

Earthquake insurance can be a good thing.  Read the fine print.  Often, the deductible applies to each type of claim;  house damage, fire damage personal property loss,  instead of to the whole loss. So if deductible is 10% you pay 10% for personal property, 10% for house etc.  Still useful, but good to know the limitations.  

Have you had your house "earthquake"?  If so, what work was done?  Do you carry earthquake insurance?

COVID-19 and new home loans

 If you've bought a home in the past 20 years, you know there is an unbelievable amount of paperwork.  And for every law suit, example of fraud or other malfeasance, new forms come along.  Over time some are incorporated into boiler plate while others stand alone.

Making loans during the pandemic has got to be challenging.  Early on, lenders started verifying a borrowers employment multiple times; some even asking about the borrowers future prospects of employment.  This seems like a stretch to me.  Asking employers to predict the future at such an unknown time.  

As our COVID economy has "matured" borrowers with existing home loans have had some protection from foreclosure through forbearance arrangements.  With proper paperwork, homeowners can miss payments without triggering a credit issue nor foreclosure.  Different lenders have and enforce different versions of forbearance.  Some loans were put in forbearance even if the borrower didn't ask, same with some student loans.

Lenders making new home loans are challenged to tell which borrowers will be able to pay loans back and which could quickly go into forbearance.  Plenty of borrowers are behind in payments, but this is not reflected in their credit reports. 

So...its time for another form!  This form asks borrowers to commit that they don't expect changes to their income.  Some even have the threat of penalties, should the certification from the borrower prove to be false.  Ack.   

Fannie Mae and Freddie Mac, who provide government backing of home loans are buying back loans in forbearance with a penalty to the lender of 5-7%.  The Federal Housing Administration (FHA) is backing loans in forbearance, but will charge the lender hefty (20%ish) fee if the loans go into foreclosure.  

With such penalties in place, it is understandable lenders are casting about for a way to mitigate their risk. While low interest rates have borrowers flocking to both new home loans and refinances, the credit market is slowly tightening.   The pool of borrowers eligible to take advantage of low rates will continue to shrink as the general credit market tightens and verification of credit worthiness is muddled by forbearance protections.

As with many things COVID, mortgage lending will continue changing (tightening?) as long as COVID is with us.  Some of these changes may stick around longer than COVID.