Purdue Pharma, U.S. States Agree to New Opioid Settlement​​​

OxyContin maker Purdue Pharma reached a settlement Thursday over its role in the nation’s deadly opioid crisis that includes U.S. states and thousands of local governments, with the Sackler family members who own the company boosting their cash contribution to as much as $6 billion, the Associated Press reported. The deal follows an earlier settlement that had been appealed by eight states and the District of Columbia. They agreed to sign on after the Sacklers kicked in more cash and accepted other terms, including apologizing. In exchange, the family would be protected from civil lawsuits. In all, the plan could be more than $10 billion over time. It calls for members of the Sackler family to give up control of the Stamford, Conn.-based company so it can be turned into a new entity with profits being used to fight the crisis. An apology is something Sackler family members have not unequivocally offered in the past, but victims are to have a forum in court to address Sackler family members — something they have not been able to do in a public setting. The settlement, in a mediator’s report filed in U.S. Bankruptcy Court in White Plains, N.Y., still must be approved by a judge.

More States Look to Cap Consumer Interest Rates at 36%​​​

With efforts to implement a national rate cap stalled, more states are weighing bans on consumer loans with annual percentage rates above 36%, American Banker reported. Lawmakers in New Mexico recently approved a 36% rate cap, which would slash the state’s current maximum APR from 175%. It now awaits the governor’s signature. Legislators in Rhode Island and Minnesota are considering similar restrictions, and consumer advocates in Michigan are gathering signatures for a ballot initiative on the same issue. The state-level action comes as congressional efforts to institute a national APR cap of 36% remain stuck. The federal legislation, championed by Democratic lawmakers, is similar to the limit Congress put in place for military members in 2006, though it would apply to all borrowers. Consumer advocates still hope lawmakers will give all consumers “the same kind of protection that Congress thought was needed” for military members, said Yasmin Farahi, senior policy counsel at the Center for Responsible Lending. But advocates are also working at the state level to cap interest rates at 36% — or lower. Doing so would help prevent borrowers from being “caught in the payday debt trap,” where they are unable to repay triple-digit APRs and end up owing far more in interest than they originally borrowed, Farahi said. Many states across the country allow payday lenders to charge APRs above 300%, and Texas, Nevada and Idaho allow annual interest rates above 600%, according to a tracker published by the Center for Responsible Lending. “These are marketed as a quick financial fix, but actually lead to long-term financial distress,” prompting consumers to miss other payments and even driving some into bankruptcy, Farahi said.

Weekly Jobless Claims Fall by 18,000 in Latest Report​​​

New weekly claims for jobless benefits fell by 18,000 last week, according to data released today by the Labor Department, The Hill reported. In the week ending Feb. 26, seasonally adjusted new applications for unemployment insurance totaled 215,000, down from a revised total of 233,000 in the previous week. New jobless claims have fallen in five of the past six weeks and have remained in line with pre-pandemic levels for most of 2022. Layoffs have remained low for months as employers struggle to fill more than 10 million open jobs from a labor force short millions of workers from pre-pandemic levels. While a record-breaking surge of COVID-19 cases caused a brief rise in claims, layoffs have fallen back toward 200,000 per week as the omicron variant's spread slowed. Continuing claims for jobless benefits rose slightly last week, but the four-week moving average of continuing claims fell to 1,539,500, the lowest level since April 1970.

Republicans Signal They May Oppose New COVID-19 Aid Unless White House Accounts for Existing Spending​​​

Three dozen Republican senators told the White House on Wednesday that they may be unwilling to approve new coronavirus aid until they first learn how much money the U.S. government has already spent, the Washington Post reported. The early warning arrived in a letter led by Sen. Mitt Romney (R-Utah), just days after the Biden administration asked Congress to approve $30 billion to boost public health as part of a still-forming deal to fund the government and stave off a shutdown at the end of next week. In their note, the 36 Republicans stressed they have supported “unprecedented investments in vaccines, therapeutics and testing” in the past, including multiple bipartisan stimulus packages adopted under President Donald Trump. But they fretted it is still “not yet clear why additional funding is needed,” particularly now, given a lack of transparency in the roughly $6 trillion approved to date. The money remains difficult to track, while federal watchdogs have been outmatched in keeping a close eye on the aid, together resulting at times in rampant fraud. The troubles prompted President Biden to announce a new campaign to combat such criminal activity during the State of the Union address on Tuesday. In response, Romney and his allies a day later asked the Biden administration for a more thorough accounting as to how the White House might spend $30 billion in new aid. And they further pressed the administration to deliver more detail on how much actually remains in existing programs, including those enacted last year under Biden’s roughly $1.9 trillion American Rescue Plan.

HUD Says FHA Delinquencies “Positive Sign” as It Weighs Premium Pricing​​​

The serious delinquency rate in the Federal Housing Administration loan portfolio is now far less than its pandemic peak, and the Department of Housing and Urban Development said that sustained improvement will factor into whether it adjusts mortgage insurance premiums, Housing Wire reported. As of December 2021, 7.28% of FHA loans were seriously delinquent, down from a seasonally adjusted high of 12.04% in March 2021, according to FHA’s latest report. Potomac Partners, a consultancy with a focus on FHA, said that the number of seriously delinquent loans had dwindled to 422,349 by January 2022, or 5.75%, based on data from FHA’s Neighborhood Watch. A HUD spokesperson said the normalization of delinquencies is “indeed a very positive sign, and something that we continue to monitor.” A report published in February by the American Enterprise Institute, a Washington D.C.-based conservative think tank, predicted that at the current rate of decline, it will take until June 2022 for the serious delinquency rate to return to pre-pandemic levels.

Commentary: Household Debt Relief Enters Critical Transition Period​​​

Since the COVID-19 pandemic began, an estimated 8.3 million mortgage loans entered forbearance (about 780,720 remain in forbearance); payments and interest for borrowers of federal student loans — the vast majority of student loans — were paused; and many lenders waived fees and deferred payments on a variety of other types of consumer credit, such as credit cards and auto loans, according to a recent blog post from the St. Louis Fed. This relief coincided with direct cash support from stimulus checks, expanded unemployment insurance benefits and the temporarily expanded child tax credit. Consequently, serious delinquency rates have been trending down across all types of debt over roughly the past two years despite the unprecedented disruption. Collectively, a historic crisis has been met with a response that helped buoy many American families in part by lightening the load of their debts. But a concern is that these policies have already expired or will expire in 2022, ushering in a critical period of debt transition that raises the risk of default and damage to families’ financial stability (e.g., losing a car, damaging a credit score). Helping borrowers transition back to sustainable solvency may also require equally thoughtful and proactive responses. Successfully navigating this transition may help maintain economic growth by avoiding disruptions to credit access among low- to moderate-income households. In addition, it may help avoid deteriorating inequities in consumer debt by preserving the assets (like homes and cars) of low- and moderate-income families, especially Black and Hispanic families. Moving beyond the current crisis presents an opportunity to consider how to reduce consumer debt loads, perhaps in part by mitigating the rising cost of debt-financed assets, such as higher education, homes and cars, according to the commentary.

Watch ABI's Latest "Industry Viewpoints" Segment Featuring Geoff Berman Discussing General Assignments for the Benefit of Creditors​​​

The latest ABI "Industry Viewpoints" segment features ABI Editor-at-Large Bill Rochelle talking with Geoffrey L. Berman, senior managing director of Development Specialists, Inc. (Los Angeles), who is an expert in the area of general assignments for the benefit of creditors. Watch the conversation by clicking here. 

Berman also is the author of ABI's General Assignments for the Benefit of Creditors: The ABCs of ABCs (5th Edition), available for purchase in the ABI Bookstore.

ASM Session Spotlight: Real Estate Implications of COVID-19 on Senior Living Business Models

The senior living sector, already stressed prior to the pandemic, has been upended by COVID-19. This panel will discuss the effects that COVID-19 has had on operational and financial performance, business models past and future, and the real estate valuations of senior living facilities. The panel will also identify what in-court and out-of-court alternatives exist, and will highlight adaptive reuse opportunities for owners and operators of these facilities. Participants will learn about the operational and financial ramifications that COVID-19 has wrought on senior living facilities, the various in-court and out-of-court alternatives available to restructure these facilities, and trends in senior living business models. The panelists also will explore various alternative financing options available for distressed businesses, including sale-leaseback and bridge financing, as well as potential adaptive reuse issues and alternatives for facilities that close. Register today for this engaging session and many more!

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