I know that if someone files for bankruptcy, their credit is ruined and obtaining a new loan or mortgage can be almost impossible for a period of 7 years.

That being said,...just how 'bad is it' when someone has an eviction on their record? I have often wondered about this considering the small number of evictions I have done.

An eviction is meaningless unless another landlord looks it up. That's because no one cares except another landlord and how many landlords call you for references when tenants leave?

...I know that if someone files for bankruptcy, their credit is ruined and obtaining a new loan or mortgage can be almost impossible for a period of 7 years....

An eviction without monetary judgement would have no effect on fico score.

If a person with a recent eviction on his/her record applied for a mortgage, would a mortgage loan officer use that information to reject an applicant? In other words, does a person's rental history have any bearing on applying for a home mortgage?

Whenever I have a rental available and someone contacts me via HotPads, Trulia, etc. wanting to view the place the first thing I do is check our online Marshall's Service to see if they have a history of undergoing a "dispossessory" (our version of an eviction).

As a general rule at least 2/3'rds of these folks have a history of being served such. Now...this may not have moved on to the actual eviction (i.e., they moved out between the time the landlord filed the initial Pay or Quit notice and the initial filing with the court and said landlord did not continue with spending more money to schedule an eviction) but being served will show up on this report.

As far as I'm concerned, I don't wish to deal with these applicants. However, I've had a few whine that this wasn't "fair" since they weren't actually "evicted".

These are (I believe) the type of folks who will focus on private landlords believing that most do not screen these past histories.

An eviction is meaningful as far as I am concerned. I just turned down a guy who was evicted even though he is a professional engineer. If a landlord has a person who can't pay for a month or so, they, meaning me, might work out a long term payment plan for that month and spread it out over a year.

If a landlord really wants a tenant out for other behaviors, then they will not make any kind of compromise or payment plan for that tenant.

No Roy, a mortgage broker is not going to look that up. They don't care. Your combining 2 different things into 1.

The eviction and the judgement. They dont care if a sheriff set tenants out (eviction). They do care if the tenant owes landlord money (judgement). Also. It only shows up (at least in my state), if the landlord records that eviction at the courthouse. Another ting too is that the mortgage company will only care if the negative impact of the judgement affects the score bad enough to make a difference.

Roy, here's the reason why the credit report isn't that big of a deal. Think about the different profit streams between land lords who need long-term paying tenants vs. your average mortgage broker who just creates a loan then sells it off on the secondary market. The broker usually has the note sold to Fannie or Freddy by the day of closing or within a week or so. My first loan on my personal residence was transferred AT the closing table. They literally held it for zero days. But the mortgage broker still got his fat fee of $3000 or so.

Bottom line: the US taxpayer is on the hook when bad borrowers fail to pay their notes. And the US taxpayer has no recourse or say in who gets these loans. So...if you were a mortgage broker...why would you care if a tenant has 10 evictions and a 380 credit score? As long at they meet whatever obscenely low standards Congress is pushing to buy votes--err, excuse me--"promote home ownership."

Adding to what Sid has said, I have sold houses to people that should NOT be buying a house. Bottom of the barrel folks. And guess what? They are normally backed by federal mortgages, be a home owner type programs. So if they don't care about evictions, who does? Other landlord's, that's it.

To further clarify the "seriousness" of an eviction...it varies depending on how much you rely on what the credit report tells you: namely, how good is a person at making consistent payments?

Mortgage brokers don't rely on consistent payments, so to them a credit report showing one or multiple evictions is not necessarily bad. They just need to get the documents signed and the mortgage sold. So they simply don't care about the likelihood someone will pay as agreed. The US tax payers shield the lending bank from any loss by taking the assets off their hands and/or backing them up with FHA/VA insurance and PMI. If the borrower defaults 3 months later, the mortgage broker doesn't have to repay 1 penny of his origination fee. Tons of upside and in reality zero downside. Quite the spectacular scam, wouldn't you agree?

Recall, the subprime crash of 2008-09 wasn't caused simply by poorly qualified borrowers failing to pay loans...that's what lit the fuse. But the fuse would've fizzled out with a few bankrupt banks...EXCEPT the fuse led to the kegs of dynamite that were the tranches of mortgage backed securities and speculators who bet on derivatives and credit default swaps. Watch the movie, "The Big Short" sometime if you want to see our financial circus at work. Anyway, back to the topic...

Most evictions don't get listed on a credit report. I don't think I have ever seen one. Credit reports sometimes pick up the money judgment. But, that is declining with the new policy to only put it on their report if the judgment includes the debtor SSN or DOB, which most don't.

An eviction will make almost no difference in most credit decisions, it usually won't even be discovered. It will effect future rentals. They will have to find a landlord that will allow the eviction history or one who won't check. This is the reason some tenants prefer a "private landlord". They think they can scam a mom and pop after the apartments and management companies turn them down. I would guess we all know at least 1 landlord in our area that doesn't do any screening beyond checking how much cash they were handed.

if you have been a renter and are now purchasing a house, the underwriter absolutely wants to see current rental history. what they actually do with that, I don't know.

The Sub-Prime lending fiasco was a real problem during the 2008 Real estate crash. One of the worst in our history. Credit scores for purchase of a vehicle matters to the fact of how high or low the interest rate will be for the borrower. On the Credit Report is the account below 70% of the high balance that is out standing. IF the account has a high balance of $1,000 and the balance is below $700 this is a positive toward the credit score. Above $700 balance adds to a lower credit score.

Not making payments on the account when they are due, were the payments 30, 60, 90 days late.

Medical Bills are they outstanding or being paid?

Auto Loans paying on time?

Mortgage payments in the past made on time and paid off?

Delinquent accounts, late payments, no credit history, credit score, etc are several of the criteria to consider. DO you as a Landlord want to take a chance with a prospect that has zero credit history and is marginal on your income qualification 3 times rent for monthly income. OR has a credit score of 500 and several delinquent accounts. Do you rent to them since their incme is 3 times rent? However now you look at calling present landlord, then previous landlord asking them questions about their ex tenant. Mainly would you rent to them again. How much was their rent payment? Were there any damages to your unit made by this tenant?

There may be a judgement on the credit report from previous landlords however 75% of the landlords may not report delinquent tenants to a credit reporting bureau.

As a Landlord you have a set of criteria that you expect from a prospective tenant and when you continue to reject poor credit risks now you have a vacancy. You are now vacant the rehab time frame and now its a month or two vacant looking for a credit worthy tenant. Do you leave your unit vacant until the credit worthy tenant shows up OR do you rent to the next person that walks into your unit. This 99% of the time is a bad idea and choice for the landlord who will be chasing his/her rent money every month. Also as a landlord your frustration level on each vacancy, repairs and re-renting many cause you to rethink and reduce your credit qualifications. Plus you may be doing minimal repairs and updates to your units. Keeping the rents low hoping to attract the best tenant for your unit. However most likely it has the opposite outcome.

The bottom line is it depends on the banks how they look at the credit report. Some banks will look at bankruptcy as a negative and say its 10 years before they will make a loan for this applicant. Other loans will happen within a few years of bankruptcy.

Higher interest rates will be a factor in a lower credit score or not being approved for the loan, especially a factor for car loans.

I would bet that 75% of former tenant that walked away from your units could careless how much they owe you and if you place a ding on their credit report; oh well thats life, next. This person will find a landlord who is needy of a tenant and landlord sees cash in hand and a job, signs the lease and never sees another rent payment

It all depends on your set of criteria and does it work for your rental business in a positive manner.

Best of Success Landlords...

Roy,

How important when I am screening? Very!

I like what Sue said, we won't accept anyone who made the take them to court.

I also figure if ONE eviction shows on the court records just double it for the non-court evictions.

We go back 5 years. Folks change living partners enough that a 5 year old eviction was probably 2 boyfriends back.

We spend our time and life energy making the homes nicer than the competition and marketing to better clientele.

I confirmed a few days ago with a credit reporting executive that credit reports will no longer be showing small claim judgements. The eviction never showed but now the judgment will not show. We MUST do an eviction report or search in addition to a CR.

BRAD

PS

Around here an eviction is basically painless to the resident. No handslap or penalties other than the hassle of moving.

An evictee last week stormed out of court and said "I was gonna move anyway."

I once had an applicant who, when checking the online Marshall's Service had a history of SIX pages of evictions. SIX pages!

Of course I wasn't going to rent to this guy. His history was one that he NEVER paid his rent anywhere that he lived.

His answer to me was a casual "I'll pay double the security deposit".

Consider this prior to the subprime lending fiasco at its highest point in 2008 at which time the real estate market hit the wall and crashed. As Landlords think of the many prospective tenants you turned away would not rent to for various reasons. Also the Landlord who rented to tenants who at the time were marginal with overall credit report review.

Unfortunately within a few years these tenants were a bad choice and the landlord evicted them. The sad fact is many in these two groups became homeowners during the subprime lending fiasco and the federal governments housing redevelopment act created during the Carter Admin and accelerated during the Clinton Admin.

For these same homeowner when the adjustable interest rates went from 3% to 8% these homeowners could no longer afford to make mortgage payments because their income did not increase to cover the jump in mortgage payment AND the value of their home fell in value by 50%. NOW the non paying homeowner was living in their house for 2 years for free or until the mortgage foreclosure occurred and they were evicted.

The Federal Government tried to counter act this with taxpayer based bailouts of course this never works. Also the Dodd Frank Bill by then Congress was created to help cure the problem HOWEVER just created more problems.

My point is what really did the banks base their credit qualifiers on for these homeowners. These bad loans created the worst real estate crash in our history. As Landlords we create a set of criteria that we look at starting with the initial phone or in person interview, rental app, app fee, credit report, stop in to see prospective tenants living conditions, call previous landlords.

an eviction is PURE PROOF they have no problem shanking you...and if you let an evicted party in it's you're fault. LEARN FROM OTHER PEOPLES MISERY...IT'S CHEAPER THAN LEARNING ON YOUR DIME.

I will rent to someone with even an eviction on their record - providing there is no money owed to the landlord at the time that they are applying for my place.

Evictions and money judgements will show provided that 3 of the 4 following criteria are exact matches: name, DOB, SS# and address.

As for mortgages. Mortgage Brokers are middlemen. They have NO say in the loan acceptance. The decision is made by the financial institutions underwriting department. As a Realtor selling homes, I can't count how many times we've had an applicant where mortgage brokers say the credit report looks great but can't find a bank to underwrite the loan. Rental history does count. A bank considers payment history as the number one criteria.

I've also had tenants who have applied for mortgage loans and the first thing the banks ask for is a copy of my account statement showing their rental payment history. They also ask the tenant for copies of their bank statements showing when their rent checks cleared the bank.

NC INVESTOR- The bureaus say they will add a judgment to the report if it has three identifiers, but if I put a SSN or DOB on the court paperwork, it has to be redacted for the public file, so the bureau would never be able to find it.