The Department of Education has failed to get back more than $1 billion owed from nearly 1,300 colleges, according to a new report from an education advocacy group, The Hill reported. The National Student Legal Defense Network, using data obtained from Freedom of Information Act requests, said in its report published Thursday that colleges owe around $1.2 billion to the department as of February. The nonprofit organization asserted that while the department pursues student loan borrowers "aggressively," the same treatment is not applied to colleges and owners. The report says that the department's failure to collect debt from colleges has likely cost it at least $218 million because "the statute of limitations on collections has expired."
Swimming in cash from an unexpected budget surplus and federal stimulus money, California is planning rent forgiveness on a scale never seen before in the United States, the New York Times reported. A $5.2 billion program in final negotiations at the State Legislature would pay 100 percent of unpaid rent that lower-income Californians incurred during the pandemic and would be financed entirely by federal money. The state is also proposing to set aside $2 billion to pay for unpaid water and electricity bills. When California became the first state to shut down its economy last year, Gov. Gavin Newsom predicted dire shortfalls in the state’s budget. But a year later, the state finds itself with so much money that it is poised to not only cover 100 percent of unpaid rent for low-income tenants, but also to give an additional $12 billion back to taxpayers, by sending state stimulus checks of at least $600 to millions of middle-class Californians. The state’s separate rental relief program would be available to residents who earn no more than 80 percent of the median income in their area and who can show pandemic-related financial hardship. In San Francisco, a family of four would have to earn less than $146,350 to qualify. California is not the only state flush with money. At least 22 states that had unused pandemic relief money and that had trimmed their budgets anticipating fiscal challenges have now found themselves with a surprising surplus in revenue. Idaho is on track for a record-breaking $800 million surplus at the end of this month, while others like Oklahoma, Utah and Washington reported similar budget increases. And while some states haven’t yet decided how to spend the money, others are funneling the cash into education, construction and reviving local arts.
The Consumer Financial Protection Bureau (CFPB) in coming weeks will adopt a rule requiring mortgage servicers to give struggling homeowners until next year to resume repayments, but is expected to carve out some groups of borrowers following industry pushback, Reuters reported. The CFPB in April proposed, among other measures, a new review process that would generally prohibit mortgage servicers from starting a foreclosure until after Dec. 31, 2021. The rule will throw a lifeline to hundreds of thousands of homeowners due to exit COVID-19 mortgage holiday or "forbearance" programs in coming months. The CFPB plans to finalize the rule and make it effective before the end of August, but has agreed to carve out certain groups of borrowers after the industry said that the proposal was too broad and beyond the CFPB's legal remit. A CFPB spokesperson said the agency is working on finalizing the proposal but did not comment on what exclusions had been agreed to.
The Supreme Court yesterday denied Thelma McCoy's petition for certiorari that sought review of a U.S. Court of Appeals for the Fifth Circuit ruling that she did not satisfy the test under Brunner v. New York Higher Education Services Corp., 831 F.2d 395 (2d Cir. 1987), for discharging her student loan debt as an "undue hardship," Reuters reported. McCoy contended that the courts of appeal when faced with defining undue hardship are "deeply divided" between the rigid Brunner test used in most circuits, and the "holistic, equitable approach" of the totality-of-the-circumstances test applied by the 8th U.S. Circuit Court of Appeals and within other circuits. The two approaches "diverge sharply in both application and outcome," and the Supreme Court's "intervention is necessary to bring uniformity to this important and recurring question," she said in her petition, filed in January. Further, she argued that her case presented "an ideal vehicle" to resolve the circuit conflict, because if her case had been filed in a non-Brunner jurisdiction, that court would have exercised its discretion to consider "all facts relevant to undue hardship." McCoy had entered college in her 40s, first obtaining a bachelor's degree, followed by a master's in 2006 and a Ph.D. in 2014, borrowing $175,000 to fund her education, according to court filings. While pursuing her Ph.D., McCoy suffered significant injuries, and had difficulty finding work after graduation due to what she said are continuing disabilities. McCoy filed for chapter 7 relief in 2016 in the U.S. Bankruptcy Court for the Southern District of Texas, and initiated an adversary proceeding against the U.S. Department of Education seeking to discharge her student loan debt, which had ballooned to $350,000.
In the turbocharged housing market, prices are surging and homes on the market are routinely selling for far more than the listing price. Those who can’t afford big down payments are often the ones losing out, the Wall Street Journal reported. Half of existing-home buyers in April who used mortgages put at least 20% down, according to a National Association of Realtors survey. In 10 years of record-keeping, that percentage has hit or exceeded 50% three times, and all have been since last fall. A quarter of existing-home buyers in April paid cash, the highest level since 2017, NAR said. Home prices are surging. The median existing-home price rose 19% from a year earlier to $341,600 in April, a record high, according to NAR. That is largely because there aren’t enough homes on the market to meet demand. In such a housing market, sellers can often choose among multiple offers. Cash buyers have an advantage because they don’t need to secure mortgages, which can make the transaction go faster. Sellers sometimes worry that offers with smaller down payments are likelier to fall through during the loan-closing process, agents say.
More than 4 million people say they fear being evicted or foreclosed upon in the coming months, just as two studies released Wednesday found that the nation’s housing availability and affordability crisis is expected to worsen significantly following the pandemic, the Associated Press reported. The studies come as a federal eviction moratorium is set to expire at the end of the month. The moratorium has kept many tenants owing back rent housed. Making matters worse, the tens of billions of dollars in federal emergency rental assistance that was supposed to solve the problem has not reached most tenants. The housing crisis, the studies found, risks widening the gap between Black, Latino and white households, as well as putting homeownership out of the reach of lower-income Americans. The reports were released on the same day as Census Bureau’s biweekly Household Pulse Survey came out. It showed that nearly 4.2 million people nationwide report that it is likely or somewhat likely that they will be evicted or foreclosed upon in the next two months. Many of those tenants are waiting to see what becomes of the Centers for Disease Control and Prevention eviction moratorium, which is set expire June 30. Housing advocates are pressuring President Joe Biden’s administration to extend it. They argue extending it would give states the time to distribute more than $45 billion in rental assistance and protect vulnerable communities from COVID-19. The rental assistance has been slow to reach tenants.
