I read this bug or issue is or rather may be caused by not having the Loyal trait. So, I deleted all my saves...as they were useless anyways. This game is legitimately unplayable in it's current state. But, as I said, I read if you have the Loyal trait...all your problems will be gone. This is false. Even with the Loyal trait I experienced the same problems. The only affect granted by having the Loyal trait was I had a interaction available to "Confront (sim) for bullying". Which further effected the relationship with another negative hit. I then had the interaction available to Apologize, which didn't recover the negative relation loss.
Legitimately...step by step...I deleted all my saved games. I use no mods and no cheats.
Started a brand New Game.
Added the Loyal trait to my favorite sim. Added said sim into my favorite neighborhood.
Then watched in horror as my sim insulted and received insults from other sims during the welcome to the neighborhood event.
Due to having the Loyalty trait, I was able to confront the other Sims about their bullying. And could apologize.
However, this accomplished absolutely nothing as the insulting began again only after a few moments of conversation.
This game is unplayable.
---edit---
I decided to test things a step further. Deleted the save file I had just started as a brand new game. Then I made another brand new game...added Loyal to my favorite Sim. Then added the Loyal trait to my second favorite sim and moved him into the house next door to me. Sure enough, he showed up with the other neighbors in the welcome to the neighborhood event.
My thought process was...maybe because in the previous game the other sims didn't have the loyal trait so that's why I was fighting with them.
Wrong.
My sim fought with the sim I knew had the loyal trait.
Having the Loyal trait or not does nothing to "fix" the issue.