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Rent Increases for Seniors

February 18, 1988

One aspect of the rent increase hitting Glendale seniors (Glendale section, Feb.11) that was not touched upon is why the new owners are raising the rents.

Property transactions like the one the Kenneth S. Hayashi Corp. just completed require loans, mostly from savings and loan associations or banks, the amounts of which are based not on present rental income but on potential rental income.

This makes it possible for the lenders to get more for the "points" and the sellers to achieve a higher profit, leaving the buyers with the problem of increasing the actual income to that potential on which the loan was based.

The fallout of this function of free-enterprise capitalism is that a large number of people like the seniors in the present case must suffer a reduction in their standard of living--having to find quarters they can afford and having to suffer the hardships of moving, or joining the increasing ranks of the homeless.

Then all of those fairly well-off involved in this, the seller, the buyer and the lender, can sit back, click their tongues at the injustice and wonder why the government doesn't do something about the problem.

KENNETH H. BONNELL

Los Angeles

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