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Behind on weekly rent and afraid of eviction – Finance & Commerce

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Demetress Malone came back to his weekly rental one day in early September to find that the door to his unit had been taken off its hinges and the electrical power shut off.

Since losing his job as a cook in March when the pandemic began, Malone had struggled to pay to the $200-a-week rent. Now, the owner of the Lodge Atlanta in Doraville, Georgia, where he had lived since September 2019, was trying to push him out. It was only after Malone sued the owner, the Brea & Lord Investment Group, to avoid being evicted that the owner backed down and replaced the door.

“When the door was gone, I couldn’t sleep,” said Malone, 49. A lawyer for Lodge Atlanta declined to comment.

Low-budget weekly rental lodgings — furnished units with limited cooking facilities that typically rent for around $200 a week — are often the housing of last resort for people on government assistance or those living from paycheck to paycheck. They usually cannot qualify for more traditional apartments because they have a recent eviction on their credit history or don’t have the money saved for a security deposit. Stays in weekly rentals can go on for months or even years. Few such residents can afford to hire a lawyer if faced with eviction.

In September, the Centers for Disease Control and Prevention imposed a four-month eviction moratorium to prevent landlords from removing tenants who present a signed declaration stating they can’t pay rent because of the pandemic. But the moratorium has sparked confusion when it comes to weekly rentals, which fall into a gray area of the housing market because they function like temporary apartments but are often licensed as motels — which are technically exempt from the moratorium.

Taking advantage of the confusion, some owners of weekly rental lodgings aren’t waiting around for the moratorium to expire at year’s end to push out people who cannot pay the rent.

“They will lock you out,” said Lynetrice Preston, 38, a mother of two teenage girls who also cares for a 2-year-old grandchild. “Lock your doors if you can’t pay rent, and they don’t let you come back in and get your stuff if you are not there.”

Preston said she found herself in that situation briefly over the summer after she lost her job at a parking valet service and owed more than $1,000 in rent to the owners of Efficiency Lodge in Decatur, Georgia. The motel is partly owned by a brother of Roy Barnes, a former governor of the state. She regained access to her unit after her parents helped her pay off some of the overdue rent, and she is now suing the lodge owners to avoid being evicted.

Although Efficiency Lodge calls itself a motel, only the courts can usually determine if its residents are guests or tenants. In Malone’s case, for example, the judge said he was a tenant because of how long he had lived in Lodge Atlanta, and last month issued a temporary injunction permitting him to remain in the unit for now. “The threat of immediate homelessness and health consequences to plaintiff far outweighs the threat to defendants,” Judge Alan C. Harvey of Superior Court DeKalb County wrote.

In general, evictions have had real health consequences for tenants and families during the pandemic. One recent study found that lifting state eviction moratoriums from March to September resulted in an additional 10,700 deaths in 27 states from COVID-19. And unless Congress extends it or provides funds for rental assistance — something currently being debated on Capitol Hill — there could be a wave of evictions across the housing market when the moratorium ends.

Judicial rulings on the applicability of the moratorium to weekly rentals have varied depending on the state. A judge in Orlando, Florida, for instance, ruled in November that the operator of the Lake Inn motel could evict three people but delayed the effective date of the order to Jan. 1. Housing lawyers said some rental operators were trying to bypass the courthouse by telling residents the moratorium didn’t apply to them — putting the onus on the residents to go to court to keep their homes.

“The vast majority of evictions from weekly rentals never see the light of a courtroom,” said Bailey Bortolin, statewide outreach and policy director for Nevada Coalition of Legal Service Providers, a nonprofit that provides free legal help to eligible residents.

On Monday, renters in Nevada — including some in weekly rentals — got a reprieve through the end of March when Gov. Steve Sisolak imposed a new state eviction moratorium for anything but nuisance-related lease violations.

Before the new Nevada moratorium was imposed, one weekly rental company — the Siegel Group — was especially prolific, filing 328 eviction actions in both Nevada and Arizona since the CDC moratorium took effect, according to the Private Equity Stakeholder Project, a consumer advocacy group. The Siegel Group, a, privately held company that operates weekly rentals and “flexible stay apartments” under the Siegel Select and Siegel Suites name, has about 12,000 such units in nine states in the south and southwest.

On its website, Siegel Suites boasts that it is a leader in offering “short-term, long-term or forever” apartments and says that “bad credit is OK.”

Jamie Armstrong, 25, said she ended up at a Siegel Suites in Reno, Nevada, in November 2019, not long after she moved out of the house she was sharing with the father of her now-18-month-old daughter. Armstrong said that the sink leaked in her unit, there were roaches and the stove only worked some of the time. Things went downhill in March, after she lost her job as a cocktail waitress at a casino and couldn’t make the weekly rent payment of about $300.

“For a time, they were waking me up and banging on the door every day,” Armstrong said. “One time, the manager came into the room without permission because I wasn’t answering the door.” She said the management also withheld her mail and cut off the free Wi-Fi to her unit.

Armstrong said the rental’s managers only backed off after she began working with a local housing lawyer around the time the CDC moratorium took effect. Armstrong, who recently got a job at a warehouse for an online grocery delivery service and signed a lease for a two-bedroom apartment, plans to leave her unit at the end of the month.

Michael Crandall, a senior vice president with Siegel, said in a statement that the company was “committed to do what we can to assist those in need during this pandemic.” But, he added, “evictions are filed when necessary because of unregistered guests, illegal squatters, property damage, criminal activity, and other conditions causing an unsafe environment.”

Judges have ruled for Siegel in more than 220 of the eviction actions it has filed since September in Nevada and Arizona, according to an analysis by the Private Equity Stakeholder Project, the advocacy group. Separately, Budget Suites of America, owned by billionaire businessman Robert Bigelow, has filed at least 46 eviction actions in Texas and Arizona and obtained court judgments in its favor in half of those cases. Budget Suites did not respond to a request for comment.

Lawyers with Atlanta Legal Aid, who are helping Malone keep his residence, are also representing Preston in her court battle with Efficiency Lodge, which operates 13 similar properties in Georgia and Florida. Preston, who pays about $200 a week for her unit, said she has paid the owners rent when she can. This month, she got a job at a nearby chicken restaurant, but she remains worried that the owners may still try to force her out because of the unpaid rent that has piled up since the summer.

Barnes, the former Georgia governor whose brother Ray is one of the owners of Efficiency Lodge and who is defending it in court, said he was not aware of complaints from residents at any of the company’s dozen other weekly rentals. He said the company had given notices to residents that specifically state that Efficiency Lodge is not a landlord.

Barnes said the company is willing to work with residents in trouble — but within reason.

“There are mortgages to be paid. There are employees to pay,” Barnes said. “We are glad to work with them. You just can’t live there for free.”

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Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom | Fintech Zoom

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Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom

Loans Bad Credit Online – Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom



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Loans Bad Credit Online – Reforming India’s deposit insurance scheme | Fintech Zoom

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The government’s incentive to step in and bail out depositors when banks fail is clear from past experience.

By Anusha Chari & Amiyatosh Purnanandam

The failure of the Punjab and Maharashtra Co-operative Bank (PMC) in September 2019 shone a light on the limitations of India’s deposit insurance system. With over Rs 11,000 crore in deposits, PMC bank was one of the largest co-op banks. That the Deposit Insurance and Credit Guarantee Corporation (DICGC) insurance covered depositors, provided little solace when the realisation hit that the insurance amounted to a mere Rs 1 lakh per deposit.

The predicament of PMC depositors is, unfortunately, not an anomaly. Several bank failures over the years have severely strained RBI and central government resources. While co-operative banks account for a predominant share of failures, other prime examples include the Global Trust Bank and Yes Bank failures. These failures entail a direct cost to the taxpayer—the DICGC payment or a government bailout. More importantly, bank failures impose long-term indirect costs. They erode depositor confidence and threaten financial stability, presenting an urgent need for deposit insurance reform in the country.

A sound deposit insurance system requires balancing two opposing forces: maintaining depositor confidence while minimising deposit insurance’s direct and indirect costs. At one extreme, the regulator can insure all the deposits, which will undoubtedly strengthen depositor confidence. But such a system would be very expensive.

A bank with full deposit insurance has minimal incentive to be prudent while making loans. Taxpayers bear the losses in the eventuality that risky loans go bad. Depositors also have little incentive to be careful. They can simply make deposits in the banks offering high interest rates regardless of the risks these banks take on the lending side.

Boosting depositor confidence and reducing direct and indirect costs require careful structuring of both the quantity and pricing of deposit insurance. Some relatively quick and straightforward fixes could help alleviate the public’s mistrust while improving the deposit insurance framework’s efficiency.

India has made some progress on this front over the last couple of years. First, the insurance limit increased to `5 lakh in 2020. Second, the 2021 Union Budget amended the DICGC Act of 1961, allowing the immediate withdrawal of insured deposits without waiting for complete resolution. These are very welcome moves. Several additional steps could bring India’s deposit insurance system in line with best practices around the world. Even with the increased coverage limit, India remains an outlier, as the accompanying graphic shows.

The government’s incentive to step in and bail out depositors when banks fail is clear from past experience. However, these ex-post bailouts are costly. The bailout process also tends to be long, complicated, and uncertain, further eroding depositor confidence in the banking system. A better alternative would be to increase the deposit insurance limit substantially and, at the same time, charge the insured banks a risk-based premium for this insurance. Under the current flat-fee based system, the SBI pays144 the same premium to the DICGC—12 paise per 100 rupees of insured deposits—as does any other bank!

A risk-based approach will achieve two objectives. First, it will ensure that the deposit insurance fund of the DICGC has sufficient funds to make quick and timely repayments to depositors. Second, the risk-based premia will curb excessive risk-taking by banks, given that they will be required to pay a higher cost for taking on risk.

India is not alone in trying to address the issue of improving the efficiency of deposit insurance. The Federal Deposit Insurance Corporation (FDIC) recognizes that the regulatory framework governing deposit insurance is far from perfect and the United States is moving towards risk-based premia. The concept is similar to pricing car insurance premia according to the risk profile of the driver. The FDIC computes deposit insurance premia based on factors such as the bank’s capital position, asset quality, earnings, liquidity positions, and the types of deposits.

In India, too, banks can be placed into buckets or tiers along these different dimensions. The deposit premium can depend on these factors. It is easy to see that a bank with a worsening capital position and a high NPA ratio should pay a higher deposit insurance premium than a well-capitalized bank with a healthy lending portfolio. The idea is not dissimilar to a risky driver paying more for car insurance than a safe driver.

Risk-sensitive pricing can go hand-in-hand with the increase in the insured deposit coverage limits bringing India in line with its emerging market peers. In a credit-hungry country like India, these moves would build depositor confidence, possibly increasing the volume of deposits and achieving the happy result of the banking system channeling more savings to productive use.

Chari is professor of economics and finance, and director of the Modern Indian Studies Initiative, University of North Carolina at Chapel Hill and Purnanandam is the Michael Stark Professor of Finance at the Ross School of Business, University of Michigan

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5 Signs You’re Not Ready to Own a Home, According to a CFP

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The housing market has boomed over the last year, despite a global pandemic and millions of Americans struggling to make ends meet. 

Many people are spending less on entertainment, clothing, travel, and other discretionary purchases during COVID. Federal student loan borrowers have seen temporary relief from their loan payments. These expenses will most likely rise again after the pandemic, and many people who committed to a new home with a large mortgage will struggle to keep up. 

I often speak with clients and prospective clients who want to buy a home before they have a strong financial foundation. Buying a home is not only one of the largest purchases you’ll make in your lifetime, but it’s also a huge commitment that’s extremely hard to undo if you have buyer’s remorse

It’s important to make a thoughtful, informed decision when it comes to a home purchase. Before you take the plunge into homeownership, check for these signs that you’re not quite ready to buy. 

1. You have credit card debt

Credit card debt can be a drain on your monthly budget, and when combined with student loans and a car loan, it can lead to high levels of stress. 

Generally, more debt means higher fixed expenses and little opportunity to save for long-term financial goals. Your financial situation will only get worse with the addition of a mortgage. I always recommend that clients be free of credit card or other high-interest debt before they consider buying a home. 

To rid yourself of credit card debt, take some time to get a good handle on your cash flow. Take an inventory of your spending over the last six to 12 months and see where you can cut back. From there, develop a realistic budget that includes aggressive payments to your credit cards. 

There are several strategies to help you knock out credit card debt fast. Regardless of the method you choose, stick with the plan and track your progress along the way. Once you pay off your credit cards, you can allocate your debt payments to savings, which can help you avoid this situation in the future.  

2. You have bad credit

Bad credit is not only a sign that you may not be ready to take on a mortgage, it can also signal a high risk to

mortgage lenders
. A high-risk status results in higher interest rates and more strict requirements to qualify for a loan. A mortgage is one of the largest loans you’ll take out in your lifetime, and if you get behind on payments, you could lose your home. 

Just as with credit card debt, bad credit could be a result of past financial mistakes. Dedicating the time to repair bad credit and improve your credit score will help you beyond purchasing your dream home. 

Start by pulling a recent credit report from each of the three credit bureaus so you can review it for errors. Dispute any errors, address past-due accounts, and bring your overall debt balances down. It’s helpful to learn what has a negative effect on your credit score so you can avoid these mistakes in the future. 

3. You don’t have an emergency fund (or an inadequate one)

If you’re unable to save for a rainy day, you probably don’t have enough money to buy a house. Owning a home is a big responsibility, and unexpected expenses pop up all the time. In addition, you could lose your job, have a medical emergency, or another unexpected expense unrelated to the home. Maintaining an emergency fund is a good sign that you have discipline and are prepared for the responsibility of homeownership.

Many financial experts recommend saving at least six months of living expenses in an emergency fund. If you have variable income, own a business, or own a house, you should save more. To build an emergency fund, set money aside from each paycheck and automate transfers to make the process easier. Give your emergency fund a boost when you receive lump sums such as bonuses or tax refunds. Start by saving one month of living expenses and build from there. 

4. You don’t have separate savings for your home

I always advise clients to set aside savings for a home in addition to an emergency fund. It’s a bad idea to start homeownership with no savings. Whether you have unexpected expenses related or unrelated to the home, having no emergency fund after a home purchase will lead to unnecessary stress — and possibly more debt. 

When purchasing a home, you’re responsible for a down payment and closing costs. While a 20% down payment is ideal to avoid private mortgage insurance, a down payment of at least 3.5% is typically required. Closing costs can range from 2 to 5% of the home’s value. 

Also, you will have moving costs, costs to spruce up your new place (like new furniture or light cosmetic updates), and any initial maintenance and repairs. Be sure to budget for these items to know how much to save on top of your emergency fund. It doesn’t hurt to boost your emergency fund, too, in preparation for homeownership. 

5. You have a low savings rate

It’s much easier to develop good savings habits before you have a lot of responsibilities. To get on track for financial independence, several studies show that you should save at least 15% of your income. The longer you wait, the more you’ll need to save. 

If your savings rate is low before you purchase a home, it will most likely worsen after becoming a homeowner. Even if your mortgage is similar to your rent, ongoing maintenance and repairs, higher utilities, and homeowners association fees can wreak havoc on your budget. 

Take a look at your current savings rate and see if you’re on track for financial independence. If you’re saving less than 15 to 20% of your income, work to improve your savings rate before you consider buying a home. A strong savings habit can help you build your home savings fund faster and ensure that a home purchase doesn’t impede your long-term financial goals. Finally, understand how much house you can afford so you can avoid being house poor. 

Buying a home can be rewarding, and when done the right way, it’s a way to build wealth. Before you decide to buy a home, it’s important to understand your numbers and ensure that you’re ready for the commitment. Without preparation, your dream home could be detrimental to your long-term financial goals.

Chloe A. Moore, CFP, is the founder of Financial Staples, a virtual, fee-only financial planning firm based in Atlanta, Georgia and serving clients nationwide.

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