%1

The Education Department’s handling of requests for bankruptcy discharges from federal student loan borrowers is raising new questions about the Biden administration’s commitment to overhaul its restrictive policy, the Washington Post reported. It’s been nearly four months since Richard Cordray, chief operating officer of the Office of Federal Student Aid, told Congress the agency was working with the Justice Department to revise its approach — a pledge that consumer advocates believed would usher in a new era. Many assumed the Education Department would soften its stance in pending cases, but the agency has continued to contest claims. A pair of recent appeals filed by the department resulted in a public backlash. In one case, the department tried to fight a court-approved discharge of $100,000 in federal student loans held by Ryan Wolfson, a 35-year-old in Delaware who had never made payments on the debt. The judge concluded that Wolfson, who suffers from epilepsy, could not afford his basic needs without the support of his father and there was no evidence to suggest his plight would improve. The other case involved Monique Wheat, a 32-year-old single mother of three in Alabama whom the court granted cancellation of $111,000 in federal students loans. Wheat earns less than $22,000 a year and, as the primary caregiver for her ill daughter and mother, could only work weekends. The Trump administration fought her request to discharge the debt, arguing that her teenage son should get a job to contribute to the household. The courts ruled in Wheat’s favor in January, yet the Biden administration appealed the decision.

The Education Department will cancel federal student loans for at least 1,800 students who attended DeVry University, once one of the nation’s largest for-profit college chains, because it fraudulently lured in applicants for years with vastly inflated claims about their career prospects, the New York Times reported. While the department has stepped up its discharges of debts for students who were victimized by their schools, the decision announced yesterday is its first approval of fraud claims involving a school that is still operating. The claims approved yesterday are just the start, officials said. They want other students who attended DeVry during the time it was making its false promises to apply for relief. Between 2008 and 2015, department officials said, DeVry advertised that 90 percent of its graduates found work in their field of study within six months. In reality, only 58 percent did. School officials knew of the discrepancy and ignored complaints about it from alumni, department officials said. Until Wednesday, the department had taken action only against schools that had closed down, including large chains like Corinthian Colleges and smaller ones like the Marinello Schools of Beauty.

Although the $46.5 billion Emergency Rental Assistance Program has paid out tens of billions of dollars to help avert an eviction crisis, some tenants who received help are finding themselves threatened with eviction again — sometimes days after getting federal help, the Associated Press reported. Many are finding it nearly impossible to find another affordable place to live. The National Housing Law Project, in a survey last fall of nearly 120 legal aid attorneys and civil rights advocates, found that 86% of respondents reported cases in which landlords either refused to take assistance or accepted the money and still moved to evict tenants. The survey also found a significant increase in cases of landlords lying in court to evict tenants and illegally locking them out. “A number of issues could be described as issues related to landlord fraud ... and a set of problems I would describe as loopholes within the ... program that made it less effective to accomplish the goal,” said Natalie N. Maxwell, a senior attorney with the group. National Apartment Association President and CEO Bob Pinnegar said the survey was not based on facts, adding that its members are doing everything they can to keep tenants in their homes, including lobbying to get rental assistance out faster. Read more.

​​In related news, Seattle’s eviction moratorium implemented nearly two years ago due to the coronavirus pandemic will be extended through the end of February and then not renewed, the Associated Press reported. Mayor Bruce Harrell made the announcement Friday about the moratorium, which has prevented evictions of residential renters, small businesses and nonprofits. The Seattle Times reports it is at least the seventh time the moratorium, first enacted in March 2020, has been extended. “With COVID cases steadily declining, the time has come for the city to move on from the broad approach of the eviction moratoria and instead drive more deliberate and focused efforts to support those most in need,” Harrell said in a statement. Harrell directed the city’s Office of Housing to distribute $25 million to renters and small landlords, as a complement to the larger rental assistance being distributed by King County. About 124,000 households — more than 12% of all renters — in the Seattle metro area, which includes King, Pierce and Snohomish counties, are behind on rent, according to a Census survey from the first weeks of January. Read more.

Foreclosures on homes in the U.S. surged in January after a pandemic moratorium ended, though they remained well below pre-Covid levels, according to new data from RealtyTrac, Bloomberg News reported. Foreclosure filings such as default notices, scheduled auctions or bank repossessions jumped 29% from a month earlier and more than doubled compared with January 2021, the report said. Lenders repossessed 4,784 properties in the month and started the process on another 11,854 homes. “It’s very important to keep these numbers in context,” said Rick Sharga, executive vice president of RealtyTrac, a unit of real estate research firm Attom Data Solutions. “Foreclosure completions are still far below normal levels -– less than half as many as in January of 2020 before the pandemic was declared. He said that after the end of the moratorium, “we’re likely to continue seeing large year-over-year percentage increases for the rest of this year.” Measured against the total number of homes, the state with the highest foreclosure rate is New Jersey, where one in every 2,336 housing units has a filing. Nationwide, the ratio is one in 5,922. Among large cities, the worst foreclosure rates in January were in Detroit, Cleveland and Chicago.

U.S. consumers added to their debt loads at the fastest pace in 14 years in 2021 as they borrowed more to afford homes, cars and other goods that are becoming increasingly expensive, according to a report released yesterday by the New York Federal Reserve, Reuters reported. Total household debt grew by $1 trillion last year, marking the largest increase in overall debt since 2007, according to the New York Fed's quarterly report on household debt and credit. The total debt balance is now $1.4 trillion higher than it was at the end of 2019. "The aggregate balances of newly opened mortgage and auto loans sharply increased in 2021, corresponding to increases in home and car prices," Wilbert Van Der Klaauw, senior vice president at the New York Fed, said in a statement. Over $4.5 trillion in mortgages were originated in 2021, reaching a historic high for the database, which goes back to 1999. Mortgage balances increased by $258 billion in the fourth quarter to $10.93 trillion at the end of December. Auto loan originations returned to pre-pandemic trends but loan amounts increased in response to rising car prices, New York Fed researchers said. "As car prices have soared, buyers have borrowed more to finance the additional cost," researchers wrote in a blog post published on Tuesday.

Tens of thousands of residents of New York City public housing, many of whom lost their jobs after the city locked down two years ago, have fallen behind on their rent, raising fears of a coming rise in evictions, the New York Times reported. The problem has been compounded because public housing tenants have so far been shut out of a depleted pandemic rent relief program. The New York City Housing Authority, or NYCHA, which runs the nation’s largest public housing system, is owed more than $364 million of the rent it charged in 2021, the largest level of unpaid rent ever, the agency said. More than 68,000 households, roughly 42 percent of all of those in public housing, had overdue rent as of November 2021, according to the agency. The bleak picture has left many residents fearful that they may eventually lose their homes, deepening the city’s housing crisis. The fear is also fueled by NYCHA’s past practices. Between 2016 and 2018, more than 40,000 evictions cases were filed against NYCHA tenants annually, according to data from the New York State Office of Court Administration collected by the Housing Data Coalition and the Right to Counsel Coalition. The cases stemmed from missed rent payments as well as issues like property damage. NYCHA sent an email to residents last month saying that it planned to “restart nonpayment eviction proceedings” after the state’s eviction moratorium expired in mid-January.