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California rents are way up this decade, but eviction filings are way down – Press Telegram

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Shirley Gibson isn’t quite sure how to feel about these numbers.

As directing attorney of the Legal Aid Society of San Mateo County — which offers legal services to low-income tenants caught between the preposterously priced southern suburbs of San Francisco and the preposterously priced suburbs of Silicon Valley — she’s seen firsthand how California’s housing affordability crisis has overwhelmed her clientele.

Rents in San Mateo County have increased nearly 55% since the start of the decade. A two-bedroom in Redwood City, the county seat, now goes for $3,500, according to data from Apartment List. Strong demand, fueled by the influx of high-income tech workers, means vacancy rates are low.

“I don’t know what a normal housing market is anymore,” said Gibson. “There’s a tush for every seat right now. You can rent any unit you want within a week.”

Theoretically that should have swelled the ranks of tenants needing her to defend them in eviction court. Ever-escalating rents should make it harder to pay rent on time, and delinquent payments are the most common reason a landlord sues to remove tenants from their property. Cutthroat demand presumably would spur landlords to evict more readily, knowing they won’t risk months of lost revenue in a post-eviction vacancy.

Yet eviction lawsuits against San Mateo renters from 2010 to 2018 dropped nearly 50%.

“This year is going to be the lowest you’ve ever seen,” said Gibson. “I don’t have a perfect explanation for why that is the case.”

It’s counterintuitive amid a worsening housing crunch, but it’s happening statewide.  While the median rent in California increased 23% between 2011 and 2018, the number of times California landlords sued their tenants to evict them dropped by nearly 40% over roughly the same period, according to data collected by UCLA researchers.

Two crucial caveats

Those dropping numbers nonetheless represent a significant number of California renters facing the prospect of a court-ordered eviction — landlords initiated more than 137,000 of them in fiscal year 2017. And there’s no data on evictions that don’t end up in court, although researchers estimate they’re about twice as common as those that do.

Still, the data shows a steep and steady drop in eviction court cases this decade in every sizeable county — with cases diminishing more in some of the priciest areas.

“It’s a puzzle that I’m not sure we have an answer to,” said UCLA eviction researcher Kyle Nelson.

Are landlords simply expanding efforts to evict tenants outside the courts? Have attempts to beef up legal aid to low-income residents paid off?

Neither academics nor landlords nor tenants can say definitively. But here are some of their best guesses.

Outside court

Non-court actions could be rising (but we lack data to know for sure.)

An unfavorable court judgement hangs an enduring legal albatross on renters — what some have termed “the Scarlet E.” In California, evictions stay on a tenant’s rental history for seven years, during which it becomes incredibly difficult to find another place to live.

But eviction lawsuits are one of the few forms of eviction that actually leaves a data trail. And that only happens if a renter stays in an apartment after being served with an eviction notice, forcing a landlord to go to court.

Landlords have plenty of other options. California doesn’t know how many families move out after a “three days to pay rent or quit” sign is affixed to their door, let alone how many strike “cash for keys” arrangements or other informal agreements to leave. (If a renter moves out because the rent is raised, that’s not an eviction).

Eviction researchers say even absent data, there’s good reason to think these undocumented evictions could be on the upswing. High rents and low vacancies mean landlords may be more willing to waive delinquent rents, buy out tenants or otherwise induce or threaten them, to get them to leave.

“Say there’s more rent increases and more tenant harassment, and either way a tenant has to move,” said Aimee Inglis, program director with Tenants Together, a statewide renter advocacy group.

“No fault”

Gibson, the San Mateo tenant attorney, says she’s seen a dramatic uptick in “no-fault” evictions over the past decade, even as court cases have declined. Until a new California eviction protection was passed in 2019, landlords could force renters to leave after their leases expire without giving a specific reason why, as long as they’re given 30 or 60 days notice.

Why have landlords used “no-fault” evictions?

Say a landlord suspects a tenant is dealing drugs on their property, but lacks proof. If the tenant fights that in eviction court, the landlord could very well lose. But if the landlord simply sends a “no-fault” notice that a tenancy will end in two months, the renter is typically out of options.

Renter advocates say landlords often abuse “no fault” evictions to retaliate against tenants who ask for expensive repairs or maintenance. The practice can also camouflage illegal discrimination.

“Instead of these fault-based cases, we’re getting these much harder to defend no-fault types of cases where legally they are harder to wrangle,” said Gibson.

In 2013, roughly half of the eviction notices clients brought to her legal aid clinic were “no-fault” lease terminations. By 2018, that share had increased to 75% — a more common reason than non-payment of rent.

There’s no statewide data on the number of “no-fault” notices. Reports of their prevalence have surged in recent months because a new state law is about to restrict them. After Jan. 1, most landlords will be required to cite one of several acceptable reasons for evicting a tenant.

It’s partly the economy

Could it be the recovery?

As the Great Recession of the late 2000s ravaged California’s economy and housing market, eviction lawsuits spiked. Adding to the misery of unemployment reaching levels not seen since the Great Depression, banks and corporate landlords frequently served eviction notices to families who lost their homes in foreclosures. The result: nearly 230,000 eviction court cases in fiscal year 2010.

Landlords say eviction lawsuits also increased during that time because the same population most vulnerable to foreclosures — families with shoddy credit histories and incomes too small for their mortgages — were likely to miss rent payments after they moved from foreclosed homes into rentals.

“You had individuals with bad credit, maybe not a lot of assets, and they moved into apartment complexes,” said Chris Evans, an attorney with the firm Kimball, Tirey and St. John, which represents landlords in more than 15,000 eviction lawsuits a year. “Inevitably those individuals, with the economy struggling, faced evictions as well.”

As California’s economy slowly rebounded, eviction cases began their decade-long descent.

But Nelson, the UCLA researcher, says that the state’s economic recovery is only part of the story. In L.A. County, the highest recorded number of eviction lawsuits were actually filed in the early 2000s, during the comparatively much milder recession associated with the dot-com bust. Eviction rates in the mid 2000s were higher in many Southern California counties than they are today, despite cheaper rents.

Most mysteriously, eviction lawsuits have continued to drop years after the state emerged from recession, even while rents have outpaced gains in renters’ incomes.

Has legal aid for tenants helped?

Tenant groups and landlord lawyers agree that over the last decade, it’s become a lot more expensive to take a renter to court.

“Because of the cost of eviction, landlords really started working to avoid it,” said Evans.

He estimates that a decade ago, his firm’s landlord clients spent under $1,000 to get rid of a tenant who contested an eviction. That included attorney fees, court filing fees, sheriff lockout fees and other costs — all costs renters risked having to pay if they lost.  In the vast majority of eviction lawsuits, tenants represent themselves.

Now, if the renter takes the case to a jury trial — an option tenants have increasingly threatened over the last decade on the advice of counsel, says Evans —it costs his clients between $10,000 and $15,000. And a jury trial is a gamble for landlords.

Tenant attorney Gibson cites San Mateo as an example of how expanded tenant legal services can change landlords’ eviction calculus. Her legal aid organization, buoyed by increased philanthropic support, has seen its practice expand from a one person team to a six-person team over the last 12 years.

“Suddenly there’s more lawyers in the community, more defense to (court eviction proceedings), so it’s getting harder and more expensive for landlords,” she said.

As a response to the foreclosure crisis, in 2009 state lawmakers created low-income legal aid pilot programs in several high-cost counties. An independent evaluation found that renters represented by state-funded attorneys were nearly 20% less likely to lose by “default judgement,” where landlords win simply because a renter doesn’t show up to court.

Better screening?

Is technology allowing landlords to better screen tenants?

As recently as a decade ago, the process for screening a rental application was fairly basic. Landlords ran a potential tenant’s credit report, and that was pretty much it.

Now, due to an explosion of third-party renter screening services, landlords can quickly and easily view much more data about prospective renters — whether they pay utility bills on time, whether they pay rent on time, whether they have a prior criminal conviction.

Fueled by technological innovations, the screening services are fairly cheap — $50 gets you a lot of info.

“It’s just a much better picture of a resident’s ability to pay prior to them moving in,” said Cynthia Wray, who’s been in the apartment management industry for nearly three decades. “And we just didn’t have that 12 years ago or more, and I think that’s made a huge difference.”

Corporate landlords and real estate investment trusts, who over the last decade have snapped up a sizable chunk of California rentals, are major utilizers of sophisticated screening services. As opposed to “mom and pop” landlords who might own one or two properties, investment firms have rigid rules about who they will and won’t accept as tenants.

“Affordable” rents?

Has the state gentrified so much that those at risk of eviction just left?

Possibly. That appears to be exactly what happened in Washington D.C.

Much as in San Francisco or Los Angeles, the cost of living in Washington D.C. exploded over the last two decades. At the same time, eviction lawsuits steadily dropped while the city’s low-income housing stock shriveled as neighborhoods gentrified.

“As DC got more expensive, it got too expensive for people to rent if there was any chance they had any financial problem,” said Maya Brennan, senior policy associate at the Urban Institute. “So renters with low incomes have either been pressed out over the past ten or so years, or pressed into a ‘shadow rental market’” — when tenants live in warehouses or garages not sanctioned as legal dwellings.

Brennan says it’s more likely these low-income renters are now in more affordable suburbs in Virginia and Maryland.

That logic could extend to California, which for nearly two decades has lost more residents than its gained from other states — an exodus fueled by Californians making less than $50,000 a year.

But many more of those low-income Californians simply moved to cheaper places in-state. Bay Area rent refugees have flocked to the more affordable climes of Sacramento and Stockton. Los Angelinos are retreating to Riverside and the Inland Empire.

You’d expect eviction suits to tick up in those counties as more vulnerable renters move in. But they haven’t.

Michael Lens, an urban planning professor at UCLA, recently tried to determine what made one Southern California neighborhood more likely than another to see landlords initiate formal evictions. One hypothesis: gentrification.

“The conventional wisdom is that landlords will be more aggressive in trying to push people out…when they think they can get somebody who will pay more,” said Lens. “But that’s not what we find, on the court side of things.”

Instead two factors had a stronger correlation with eviction filings than rising rents: whether a neighborhood was very poor, and whether a neighborhood had lots of African-Americans.

Despite lots of national publicity in recent years, eviction research is still in its infancy. Which means a definitive answer for California’s counterintuitive trend may not surface for awhile.

“Evictions are incredibly complex, and the world of people thinking about them deeply expanded dramatically over the past couple years,” said Brennan. “But the number of people with enough regionally specific knowledge has actually not increased that much.”

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Early Termination of a Car Lease

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If you’re leasing a vehicle in order to save money, but are thinking of terminating your lease contract early, you may want to think twice. Leases aren’t always as easy or as affordable to get out of as auto loans.

Can You Terminate Your Car Lease Early?

In most cases, you can get out of an auto lease early, but you may not be able to do it cheaply.

Leasing typically comes with fees both at the beginning and end of your term. However, if you need to get out of your lease early, there may be early termination fees (ETF), making the cost more than you bargained for.

Additionally, lessors often require you to pay all your remaining lease payments in one lump sum before releasing the contract early. Costs involved with getting out of your car lease early may also include:Early Termination of an Auto Lease

  • Excess mileage charges
  • Wear and tear fees
  • Any taxes not yet collected
  • Any negative equity
  • Storage and transport fees
  • Pay the cost of sale preparation

Check your lease contract to see if your lessor has any charges for terminating your lease early, or if there are stipulations that prevent you from getting out of the contract before a certain time. Even if there are extra fees imposed on you for returning your leased vehicle early, it might be easier to terminate a lease nowadays than it’s been in the past.

Since the pandemic, many dealerships and lenders have pushed into the digital realm to get business done. This includes video conferences to meet with dealers that typically needed to be done in person in the past. Of course, your vehicle still needs to be turned into a franchised dealership to be inspected and processed before a leasing company allows you to terminate your lease contract early.

Is it Worth it to Terminate Your Lease?

The first step is to look at your leasing contract and see if you even can get out of your lease early, and how much it’s going to cost you in ETFs. Then, you need to gather the following information:

  • Your monthly lease payment amount
  • How many payments you have left on your contract
  • The residual value of the vehicle

To figure out a good ballpark figure for getting out of your leased vehicle early, add together the cost of your remaining lease payments and any ETFs. To see if it’s worth it, compare this figure with the buyout price at the end of your lease, and find out what the current market value of the car is by checking sites like Kelley Blue Book and NADAguides.

Depending on how close you are to the end of your lease term, if the buyout price on the vehicle is significantly lower than the early termination price, it may be a good idea to wait it out. Then, once you buy out your lease, you can trade in the car for something else.

If you decide not to wait, how you handle getting out of your leased vehicle early could depend on the difference between the current market value of the car and the residual value of the vehicle as predetermined in your leasing contract. If the car has more value than the lessor predicted, you may be able to sell it for enough to pay your way out of your lease early.

Three Options for Terminating Your Lease Early

If you’re looking to get out of your lease early, for whatever reason, you typically have three options:

  1. Sell your leased car to a dealer – Selling your leased car to a dealer is similar to doing a trade-in, except they pay off your lease contract, including the early termination fees. It’s typically a pretty easy process, especially since used vehicles are in high demand since the pandemic. You may be able to get a little more for a car that’s coming off a lease since the turnaround time on a sale is likely to be shorter, depending on demand. If this is the case, you may even be able to walk away with some cash in hand depending on if the dealer’s willing to pay more than the lessors estimated residual value on the vehicle.
  2. Have someone else take over your lease – Lease assumption isn’t always something you can do, but in many cases, you can transfer your lease to someone else, as long as they meet all the lessor qualifications and there’s equity in the vehicle.
  3. Lease buyout – With the demand for used vehicles at affordable prices up right now, you may be able to buy out your lease then sell the car privately as long as you get enough money to make it worth your while. If you can’t come close to selling it yourself for the amount you need to pay off your lease, including ETFs, it may not be worth it to try and get out of the vehicle early. Most leasing companies allow for some form of early lease buyout, but again, it may cost you those extra fees.

If Leasing Isn’t for You

Now that you’ve figured out whether it’s worth it or not to get out of your lease early, it’s time to decide what to do next when it comes to getting a vehicle.

If you didn’t mind leasing but the car just wasn’t for you, you likely have the option to swap into another lease on a different vehicle with the same company. Many lessors contact lessees toward the end of their contracts to see if they’d be willing to get into another car lease early.

However, leasing isn’t for everyone. If you found that the restrictions that come with it such as the mileage limitations, or cost of maintenance and repairs are too much for you to handle, it may be time to consider an auto loan for your next go-round. If this is the case, Auto Credit Express wants to get you started on the path toward your next vehicle.

We’ve gathered a nationwide network of special finance dealerships that are signed up with lenders to help people with credit challenges. Whether you’re just not sure where to start or you need a little help due to bad credit, start here. By filling out our fast, free, no-obligation auto loan request form, you’re taking the first step toward finding your next car loan without all the hassle of searching. Get started right now!

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GSB focuses on social responsibility

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State-owned Government Savings Bank (GSB) has focused on providing loans to people without a record in the National Credit Bureau system or with bad credit over the last year to help those impacted by the pandemic deal with unprecedented economic hardship.

GSB president and chief executive Vitai Ratanakorn said the bank has extended loans to people with no credit history who have never borrowed from commercial banks or non-bank institutions.

He said the bank had already provided 1.5 million loans to members of this group of people.

The bank has also provided loans to 200,000 people with bad credit records.

Mr Vitai said the lending was aimed at drawing those outside the credit bureau system into the system and enabled them to get access to the loans, which was one of the main roles of state-run banks. This lending has been supported by the government.

He said this lending was not aimed at seeking profit as GSB charged a low monthly interest rate of 0.1-0.3%. For example, if the bank provided a 10,000 baht loan to a person under this scheme, it would only gain interest income of around 120 baht per year.

In addition to its objective of becoming the country’s genuine social bank, GSB’s other goal this year is to prevent loans from becoming bad debts, he said. The bank will rush to help customers in danger of accumulating bad debt to restructure before it reaches that stage.

Mr Vitai said GSB will not focus on growing its loan portfolio during the first six months of the year, but on serving the state’s policy of helping people and business operators cope with the impacts from Covid-19. Grassroots people and small and medium-sized enterprises are suffering the most from the pandemic, he said.

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How to Start Over When You’ve Lost Everything

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Upset women laying on the wood floor of her living room and petting her dog.

Image source: Getty Images

When you’re down to nothing, you have everything to gain.

People start over for many reasons, including job loss, divorce, illness, and business failure. Whatever the reason, if you’re starting anew, here are some steps to take in rebuilding.

Acknowledge the twist

Remember that you’re not starting from scratch. The fact that you’ve lost assets means that you had assets to lose. Whether that’s a retirement account, home, or business doesn’t matter. You know what it’s like to work for — and achieve — something. You did it once; you can do it again.

Establish credit in your name

If you don’t have much credit in your name, establish your own healthy credit file by taking out small amounts of credit and paying them off like clockwork each month. If your credit score has taken a hit, apply for a credit card for people with bad credit, use it to make small purchases, and pay it off each month before the bill comes due. Or you might ask someone you’re close to to add you as a user on their credit card. Your credit score gets a boost each time they make a payment, even if you never touch the card yourself.

Invest right away

The sooner you begin, the faster you can recoup losses. Maybe you can’t invest as much as you once did. That’s okay. Something is better than nothing, and you can add to your investment pot over time. The more time compound interest works its magic, the better. Every dollar helps, whether you plan to retire in 10 years or 30.

If you’re employed by a company that matches a percentage of 401(k) contributions, do whatever you can to contribute at least that much. The matching funds are basically free money.

Let’s say you earn $60,000 annually, plan to work 15 more years, and your employer matches up to 5% of your contributions. Here’s how much you’ll have put away with just your 5% on its own:

Annual Income

Percent Contributed

Amount Contributed

Average Annual Rate of Return

Time Until Retirement

Value At Retirement

$60,000

5%

$250/month, before taxes

7%

15 years

$75,387

Since your employer also matches that 5% of your income, you’ll have $150,774 instead.

If you were to raise your pre-tax contributions to 10%, here’s how it would look instead:

Annual Income

Percent Contributed

Amount Contributed

Average Annual Rate of Return

Time Until Retirement

Value At Retirement

$60,000

10%

$500/month, before taxes

7%

15 years

$150,774

Including the additional 5% contributed by your employer, you would have $226,161 at 15 years. It’s not a fortune, but could be very helpful. By the way, if you don’t touch it for 20 years, that nest egg would be worth nearly $369,000. If you don’t plan to retire for 30 years, it will be worth more than $850,000.

If you’re not with a company that matches contributions, find a brokerage firm that supplies the level of education and direction you’re looking for and get started.

Get professional help

After financial trauma of any sort, it’s tempting to invest aggressively. While in some circumstances it could be an effective way to make up for losses, it may not be the best move if you’re closing in on retirement. Consider working with a financial advisor, even if it’s on an hourly basis and you pay only for their time helping you come up with a smart investment strategy.

Postpone Social Security

One thing my husband and I (and many of our friends) have done is raise the age at which we expect to retire. We don’t see it as a sad thing. I never want to stop working, and now that my husband is in a job that tickles him, he’s not in a hurry either. The minimum age to retire is 62, but if you can wait until you’re 70, you max out your monthly Social Security payments.

Find support

Millions of people have made money, lost money, and started over. Chances are you already know a few people who’ve redesigned their lives from the bottom up. Talk to them. Ask them what they learned from the experience. If they had it to do over again, is there anything they would change?

People who experience hardship often have the best stories to tell and are often an excellent source of inspiration. It may not be easy now, but with luck, you can look back one day and say, “Hey, I did okay — despite the unexpected setbacks.”

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