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U.S. household debt rose at the fastest pace since 2013 in the second quarter, driven by a mortgage boom as Americans took advantage of low borrowing costs and sought more space to work from home, Bloomberg News reported. Household liabilities climbed $313 billion to $14.96 trillion as of the end of June, a 2.1% rise from three months earlier, the Federal Reserve Bank of New York said in a report published yesterday. Most of the increase came in mortgage balances. With the average 30-year rate declining in the period, millions of Americans with good credit took the opportunity to refinance and cut their monthly payments. Some 44% of the country’s entire $10.4 trillion stock of mortgages was originated in the 12 months through June, according to the New York Fed. Credit-card balances, while they rose by $17 billion in the second quarter as the consumer economy rebounded, are about $140 billion lower than at the end of 2019.

The full Senate Judiciary Committee will be holding a hearing today at 10 a.m. EDT titled "Student Loan Bankruptcy Reform." ABI's Commission on Consumer Bankruptcy submitted a written statement for the committee's consideration as student loans and bankruptcy were the first issue addressed in its Final Report. Illinois Attorney General Kwame Raoul, Elizabeth Gonzalez of the Public Law Center, Diane Barta, Beth Akers of the American Enterprise Institute and Christopher Chapman of AccessLex Institute are scheduled to testify at the hearing. For more information on the hearing and a link to the live webcast, please click here. 

The White House said yesterday that the Centers for Disease Control and Prevention was “unable to find legal authority for a new, targeted eviction moratorium” and asked that states and local governments put in policies to keep renters in their homes, the Associated Press reported. Mass evictions could potentially worsen the recent spread of the COVID-19 delta variant as roughly 1.4 million households told the Census Bureau they could “very likely” be evicted from their rentals in the next two months. Another 2.2 million say they’re “somewhat likely” to be evicted. The prospect of mass evictions has led to criticism that the Biden administration was slow to address the end of the moratorium, which expired over the weekend. But the White House says that it lacks the authority to extend a national moratorium. That’s largely because the Supreme Court signaled in a 5-4 vote in late June that it wouldn’t back further extensions, with Justice Brett Kavanaugh writing that Congress would have to act to extend the moratorium. The White House noted that state-level efforts to stop evictions would spare a third of the country from evictions over the next month.

States can allocate some of the $10 billion in federal funding for struggling homeowners to help people who bought their residences with nontraditional home loans, according to Treasury Department officials, the New York Times reported. Guidance issued yesterday for the new Homeowner Assistance Fund allows states to provide financial aid to qualified residents who face foreclosure on a loan for a mobile home or a home acquired through a contract for deed — a loan financed by the seller of the property. Some elderly residents who have taken out a reverse mortgage on their homes — a deal in which borrowers can get cash for the equity in their house — may also qualify for the emergency assistance money. Advocates and some state governments had prodded the Treasury Department to extend the program’s support to those who do not have traditional mortgages. A handful of states, including Texas and New York, drew up preliminary plans that would allow them to allocate some of the money in the Homeowner Assistance Fund to those with mobile homes or houses acquired through contracts for deed, which are sometimes called land contracts.

Loan officers at U.S. banks reported easing standards and terms on business loans in the second quarter as the economy revved up on the back of wider reopenings and rising coronavirus vaccination rates, Reuters reported. The officers also said in the Federal Reserve survey released on Monday that there was greater demand for business loans from firms of all sizes. "Major net shares of banks ... cited a more favorable or less uncertain economic outlook, more aggressive competition from other banks on nonbank lenders, and improvements in industry-specific problems as important reasons," the U.S. central bank said in its quarterly survey. The U.S. economy grew at a 6.5% annualized rate in the second quarter, pulling the level of gross domestic product above its pre-pandemic peak, Commerce Department data last Thursday showed. For consumers, banks reported easing standards across all three loan categories — credit card loans, auto loans, and other consumer loans — and saw stronger demand for them during the same period.

The full Senate Judiciary Committee will be holding a hearing tomorrow at 10 a.m. EDT titled "Student Loan Bankruptcy Reform." ABI's Commission on Consumer Bankruptcy will be submitting written comments for the committee's consideration as student loans and bankruptcy were the first issue addressed in its Final Report. For more information on the hearing and a link to the live webcast tomorrow, please click here.

To access the Commission's full report, please click here.

Using pandemic stimulus money, nearly two dozen schools across the country are forgiving fees for things like extra courses, parking tickets, lost library books and, in some cases, tuition, Bloomberg News reported. On Wednesday, New York Governor Andrew Cuomo announced what will be the largest of these programs, erasing $125 million in unpaid tuition and fees for students in the City University of New York system. Students can get to graduation owing a range of fees that, in some cases, can exceed $10,000. By comparison, those who finished college at either public or nonprofit schools in 2019 and took out loans, left with an average of almost $29,000 in debt, according to The Institute for College Access and Success. Students who drop out of school because of unpaid balances suffer the worst of all worlds: No degree and student loan payments over their head.

A national ban on most residential evictions expired after Saturday, setting the stage for a potentially widespread displacement of low-income renters that looks poised to hit Southern states particularly hard, the Wall Street Journal reported. Meanwhile, only about $3 billion out of $46.6 billion in federal rental assistance meant to prevent tenant evictions and help struggling landlords had reached landlords and tenants by the end of June, according to the U.S. Treasury Department, which noted that the pace at which local programs were disbursing the funds has been increasing. The federal Centers for Disease Control and Prevention enacted the eviction ban in September to prevent evictions of millions of tenants who were unable to pay rent because of financial hardship during the pandemic. The CDC has extended the moratorium three times. The White House said on Wednesday that only the U.S. Congress could extend it again, citing a Supreme Court ruling that limited the CDC’s power to renew it. But lawmakers failed to reach an agreement to renew the ban.

American consumers increased their spending by 1% in June — a dose of energy for an economy that is quickly rebounding from the pandemic recession but is facing new risks led by the delta variant of the coronavirus, the Associated Press reported. At the same time, a key inflation barometer that is closely followed by the Federal Reserve surged 3.5% last month from a year earlier. That was the fastest such 12-month surge since 1991. June’s solid increase in consumer spending provided further evidence that consumers are driving a strengthening recovery from the pandemic recession. Friday’s report from the Commerce Department also showed that personal incomes, which provide the fuel for spending, edged up 0.1% in June after two months of big declines, reflecting the waning of several government support programs. In its report on consumer spending in June, the government said that goods purchases rose a modest 0.5%, while spending on services increased a stronger 1.2%. As vaccinations have increased and the economy has increasingly reopened, more Americans have been shifting their spending away from the physical goods that many purchased while hunkered down at home to to spending on services, from haircuts to airline tickets to restaurant meals.