%1

America’s economic recovery is in an uneasy pause, with key indicators of hiring, shopping and investment stalling or in retreat in the wake of a resurgence in coronavirus cases across broad sections of the country, and with Congress and President Trump showing no signs of progress on another stimulus deal, the New York Times reported. Real-time measures of consumer spending, business sentiment, small-business reopening plans and even available jobs began flatlining last month, suggesting that the wave of virus infections that swept across parts of the U.S. in June and July came with economic consequences. Small-business data from the time management firm Homebase shows no improvement since the middle of the summer in employment or hours worked in crucial parts of the economy. Job postings from the online recruiting site Indeed slipped backward this week for the first time since May. Now, key policy supports that included a $600-per-week unemployment insurance expansion have begun to lapse. Congress appears unlikely to pick up negotiations on a new relief package until September, and analysts are increasingly accounting for the possibility that lawmakers will fail to strike a deal before the November election. By that point, with the changing weather pushing many people back inside, public health officials fear a new wave of coronavirus infections. Those twin risks — the path of the coronavirus and waning policy support — loom over the country’s fledgling recovery when the economy has yet to recover about 60 percent of the jobs lost since the start of the pandemic. More than half of those who are still out of work say they never expect to go back to their old jobs, according to polling from the online research firm SurveyMonkey.

Students at some for-profit career schools could find themselves paying hefty interest charges when using a credit line offered by PayPal, a group of consumer watchdog groups warned last week. More than 150 small career schools and technical programs, most of which aren’t accredited and are loosely regulated, offer students the option to pay tuition using PayPal Credit, a digital credit line marketed by PayPal Holdings and issued by Synchrony Bank, the groups found. The line, similar to a credit card but without the plastic, currently has an interest rate of about 24 percent, and is typically promoted with a six month, no-interest period. Borrowers are charged interest retroactively if the entire balance isn’t paid by the end of the promotion, a feature known as “deferred interest,” the groups said in a letter to federal regulators. PayPal mainly promotes the credit account for shopping online, but also makes it available to schools offering short-term certificate programs that are generally ineligible to offer lower-cost federal student loans, according to the consumer groups. In some examples cited by the groups, a disclosure stating that the card carries no interest “if paid in full in six months” appears prominently, but is hard to find on others. In addition to a double-digit interest rate, PayPal Credit charges late fees of up to $40 per missed payment. PayPal also follows “aggressive” collection practices, the groups found.

Two weeks have passed since President Trump announced that he would sidestep a congressional stalemate to deliver $400 in extra weekly benefits to tens of millions of unemployed Americans — a short-term fix meant to replace the $600-a-week emergency federal supplement that expired last month, the New York Times reported. Since then, as more details of the plan — known as Lost Wages Assistance — have emerged, so have problems with finding the funding and getting it to the hands of those who need it. What is now clear is that the federal supplement is $300 a week, not $400. And by Thursday, only one state, Arizona, had started paying out. The federal government is offering an extra $300 a week to unemployed workers. Trump is using money from the Federal Emergency Management Agency, which normally provides disaster relief. The additional $100 was supposed to be supplied by states, but most are struggling to meet other expenses. Tax revenues have been sinking at the same time that costs — like precautions to curb the spread of the coronavirus — have soared. Ultimately the administration said that the states’ basic benefit payments could be counted toward their $100 share. Montana is the only state so far to choose the $400 option, according to FEMA. Jobless workers with the smallest benefits will not get the supplement. Only people who qualify to receive at least $100 in unemployment benefits each week — either through the regular state program or a federal pandemic assistance program — are eligible for the extra federal funds. In Colorado, for example, the rule leaves out 6 percent of those receiving unemployment pay — or roughly 28,000 people, said Cher Haavind, deputy executive director of the state Department of Labor.

The number of serious mortgage delinquencies rose to a 10-year high in July, according to a report released Friday by financial data firm Black Knight, The Hill reported. The number of homes with mortgage payments more than 90 days past due but not in foreclosure rose by 376,000 in July to a total of 2.25 million, according to Black Knight. Serious mortgage delinquencies are now at the highest level 10 years and have increased by 1.8 million since July 2019. While the total number of delinquent mortgages dropped nearly 7 percent since June, the record rise of serious delinquencies is a troubling sign in the wake of the recent expiration of federal foreclosure and eviction protections. The Coronavirus Aid, Relief and Economic Security (CARES) Act enacted in March imposed a ban on foreclosures and evictions until July 31. The Trump administration and lawmakers failed to reach a deal to extend those protections after they expired, and an executive order issued by President Trump to mitigate the damage may not be sufficient to protect all who are at risk of losing their homes, according to housing advocates.

The Consumer Financial Protection Bureau (CFPB) on Friday issued a consent order against Go Direct Lenders, Inc. (Go Direct), a California corporation that is licensed as a mortgage broker or lender in about 11 states, according to a CFPB press release. Go Direct offers and provides mortgage loans guaranteed by the United States Department of Veterans Affairs (VA). Go Direct’s principal means of advertising VA-guaranteed loans is through direct-mail advertisements sent primarily to United States military servicemembers and veterans. The Bureau found that Go Direct sent consumers numerous mailers for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or that lacked required disclosures, in violation of the Consumer Financial Protection Act’s (CFPA) prohibition against deceptive acts and practices, the Mortgage Acts and Practices – Advertising Rule (MAP Rule), and Regulation Z. The consent order requires Go Direct to pay a civil money penalty and imposes requirements to prevent future violations. The Bureau found that Go Direct disseminated advertisements that contained false, misleading, and inaccurate statements or that failed to include required disclosures.  For example, Go Direct advertisements misrepresented the credit terms of the advertised mortgage loan by stating credit terms that the company was not actually prepared to offer to the consumer, including advertising a lower annual percentage rate than it was prepared to offer. 

A new study released by the government’s watchdog the Government Accountability Office (GAO) has found that long wait times for appeals for disability claims had disastrous impacts for those in need of disability benefits from the Social Security Administration. Over 100,000 people died while waiting for their appeal, while roughly 50,000 had to file for bankruptcy, YahooFinance.com reported. The report comes at a time of “heightened risk” to “worsening medical and financial conditions,” the GAO says, for Americans living with disabilities due to the coronavirus pandemic. The report’s findings could indicate troubling times ahead for the millions who might need disability benefits. Roughly 10 million people receive disability benefits, according to the SSA Annual Statistical Report. The majority of disability benefits went to disabled workers — 87 percent of all beneficiaries. In December of 2018, payments to disabled beneficiaries totaled almost $11.6 billion. As part of this analysis the GAO examined wait times and outcomes during the fiscal years 2014 to 2019. They examined applicants for disability benefits who appealed Social Security Administration’s (SSA) decision to deny benefits or only partly award benefits they applied for. The study found that most people who filed an appeal “waited more than 1 year for a final decision on their claim.” According to the analysis of SSA data, wait times spiked from 561 days on average in 2010 to nearly 840 days on average in 2015. The study says this wait time followed an increase of disability claims subsequent to the Great Recession, which could prove worrisome given the COVID-19 pandemic. 

The Department of Housing and Urban Development says that it will extend a ban on evictions in single-family houses with mortgages issued by the Federal Housing Administration, a protection that would be far narrower than the now-expired eviction moratorium in the CARES Act, CNBC.com reported. The expired moratorium also included properties backed by government-sponsored lenders Fannie May and Freddie Mac, and was estimated to have covered nearly a third of the country’s rental units. “HUD’s new moratorium only applies to a slight fraction of the units covered under the CARES Act and does nothing to protect the overwhelming majority of renters in the United States from eviction and its devastating consequences,” said Emily Benfer, an eviction expert and visiting professor of law at Wake Forest University. The federal eviction moratorium in the CARES Act expired at the end of July, and since it required tenants in protected properties to get 30 days notice of their eviction, proceedings will be able to start as early as next week, said Eric Dunn, director of litigation at the National Housing Law Project. At the same time that federal protections against eviction come to an end, many states that paused their own proceedings have now allowed them to resume. Since July 15, eviction moratoriums have lapsed in Michigan, Maryland, Maine and Indiana. Read more.

In related news, with less than two weeks before a statewide moratorium on renter evictions expires, California lawmakers on yesterday declined to back a plan that would have provided tax credits for landlords while sending a separate proposal that would protect tenants back for additional negotiations with Gov. Gavin Newsom (D), the Los Angeles Times reported. Three other bills dealing with affordable housing and homelessness were also sidelined for the year as the Senate and Assembly appropriations committees rushed to meet an end-of-the-month deadline for acting. The Assembly Appropriations Committee sidelined a measure by state Sen. Anna Caballero (D-Salinas) that would have created a process for preventing evictions for three years as long as a landlord and tenant reach an agreement on forgiving rent in exchange for the landlord receiving a tax credit. Senators moved forward a bill by Assemblyman David Chiu (D-San Francisco) that would prevent evictions for up to a year. The measure, AB 1436, would block evictions of renters who missed payments during the COVID-19 “emergency period,” which would end 90 days after the state of emergency order is lifted or April 1, 2021, whichever occurs first. Landlords would also be allowed mortgage forbearance under the legislation. He cited a U.S. Census Bureau survey from last month that showed 4.3 million renters in California reported “little to no confidence” in their ability to pay rent in August. The measure is opposed by groups including the California Chamber of Commerce and the California Apartment Assn., which represents 50,000 owners and managers. Debra Carlton, an executive vice president of the association, said the delay in rents until 2021 will be a burden for senior landlords who depend on rentals for income and owners who need the revenue to pay mortgages and repairs. Read more.

Additionally, New York Gov. Andrew Cuomo (D) signed an executive order yesterday expanding a coronavirus-related emergency moratorium on evictions and foreclosures of commercial properties until Sept. 20, the New York Post reported. The move gives business owners heavily impacted by state-ordered closures associated with COVID-19 more another month to meet their rental obligations. “While we have made great progress in keeping New York’s infection rate low, this pandemic is not over and as we continue to fight the virus, we are continuing to protect New York businesses and residential tenants who face financial hardship due to COVID,” Cuomo said. It’s an extension from an original March 20 eviction moratorium impacting commercial and residential renters, although Cuomo recently signed another bill allowing tenants some protections if they can prove they’ve been negatively impacted by the coronavirus. But commercial tenants are feeling the crush — and have been for five months. A recent survey by the NYC Hospitality Alliance found over 80 percent of bar and restaurant owners couldn’t pay their full July rent. Nearly 40 percent said they wouldn’t be able to pay at all. Read more.

A recent post by New York Federal Reserve researchers in the Liberty Street Economics blog examined if areas that are more financially distressed were affected by COVID-19 to a greater extent than other areas. The researchers used county-level data, on numbers of cases and deaths, compiled by the New York Times and the New York City Department of Health (Department of Health) for our analysis. For measures of financial health, they used the New York Fed’s Consumer Credit Panel (CCP), a nationally representative sample of Equifax credit report data. Our data set for this analysis includes roughly 1 percent of the nation’s adults with credit records in anonymized form. "We have seen that there is a strong relationship between COVID-19 cases and pre-COVID delinquency rates at the county level and this correlation cannot be easily explained by some known sources of heterogeneity in COVID-19, such as income, minority status, and population density," according the the New York Fed researchers. "This suggests that the harms from COVID-19 — the loss of life and health, the decline in employment, the destruction of businesses and the surge in medical expenses — will fall on counties particularly ill-suited to bearing them."

Though Trump signed an executive order last week directing agencies to study the need for a new moratorium, it did not directly stop evictions across the country, the Washington Post reported. In New Orleans, city courts have received more than 500 eviction complaints since late mid-June when a state eviction ban was lifted. There are no signs of it slowing down after Trump’s action, local officials say. In Milwaukee, where thousands of people are still waiting for unemployment benefits, legal aid attorneys discussed presenting Trump’s executive order to judges in the hope of stopping the recent spike in local evictions but determined it would not work. Trump’s order was appreciated, but there was “nothing definitive that the court could act on,” said Colleen Foley, executive director of Legal Aid Society of Milwaukee. “I hope there is something coming down the pike, [but] right now we can’t act on it.” Trump’s executive order directed some regulators to study whether an eviction moratorium was necessary and others to investigate whether they could appropriate money for rental assistance. But it fell short of reinstating the federal eviction ban that prohibited evictions of 12 million renters in government-backed properties that expired last month, as many had expected.