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A bipartisan group of U.S. senators wants federal housing agencies to extend a moratorium on foreclosures in Puerto Rico into 2019 after the devastation on the island and a big surge in mortgage delinquencies, the New York Times reported. The four senators said in a letter on Friday that a longer moratorium was needed because large swaths of Puerto Rico remained without electricity in the aftermath of Hurricane Maria and because many residents were still trying repair the damage to their homes. The senators noted that homeowners needed more time to “pick up the pieces of their lives” than was allotted under the current grace period, which expires in March. They want the moratorium extended until March 2019, along with a commitment that lenders will not seek to collect any mortgage payments in that period. The four senators — Marco Rubio (R-Fla.), Catherine Cortez Masto (D-Nev.) Robert Menendez (D-N.J.) and Bill Nelson (D-Fla.) — was sent to officials at the Department of Housing and Urban Development and the mortgage finance giants Fannie Mae and Freddie Mac. About one-third of the island’s 425,000 homeowners are behind on their mortgage payments to banks and Wall Street firms that previously bought up distressed mortgages. And some 90,000 of those borrowers became delinquent as a consequence of Hurricane Maria, according to the data firm Black Knight.

Puerto Rico must keep paying pension bondholders while the judge overseeing the island’s bankruptcy case decides whether the investors also have a right to retirement contributions made to government workers, Bloomberg News reported. Puerto Rico, which has about $3 billion of pension bonds outstanding, owes about $13.9 million each month in interest to holders of the debt. It’s one of the few commonwealth securities that’s paying interest to investors. The commonwealth sold the bonds in 2008 to help boost funding levels for its retirement system. That program is the worst-funded among U.S. states and territories, according to Moody’s Investors Service, and running out of cash. Its unfunded pension liability is approaching $50 billion. Bondholders include affiliates of Oaktree Capital Management LP, Altair Global Credit Opportunities Fund and Puerto Rico AAA Portfolio Bond Fund Inc. Pension bonds maturing in 2038 traded Wednesday at an average price of 25.5 cents on the dollar, down from 38.1 cents on Sept. 18. Hurricane Maria struck the island on Sept. 20. Read more. 

In related news, Hedge funds are increasingly betting on whether bond insurer MBIA Inc. can survive heavy losses expected from Puerto Rico’s bankruptcy, the Wall Street Journal reported. Short sellers have borrowed about 40 percent of the firm’s stock since September, wagering that it will drop, while value investors Fine Capital Partners L.P. and EJF Capital LLC have taken the opposite side, buying millions of MBIA shares. Credit hedge funds like Mill Hill Capital LLC have bought credit default swaps, or CDSs, that gain value as the probability of an MBIA default rises. By one measure, MBIA has done less to prepare for Puerto Rico-related losses than its competitors. MBIA’s most recently reported loss reserves amount to about 10 percent of its exposure to Puerto Rico, compared with about 20 percent for Assured Guaranty Ltd. and about 40 percent for Ambac Financial Group Inc., according to data from S&P Global Market Intelligence. Read more. (Subscription required.) 

Puerto Rico’s government is running into resistance in Washington, D.C., on pending legislation affecting the island while its federal overseers try to tighten their grip over local policy decisions, WSJ Pro Bankruptcy reported. The Republican tax overhaul headed for a vote in Congress this week doesn’t grant any of Puerto Rico Gov. Ricardo Rosselló’s requests for more favorable tax treatment and weakens the rationale for U.S. companies to manufacture there, according to lobbyists and tax experts. House Republicans also unveiled a disaster relief package on Monday evening to help Puerto Rico rebuild from Hurricane Maria, with some strings attached. The legislative changes come as some lawmakers have voiced mistrust of the indebted island government after details emerged on a controversial $300 million no-bid construction contract awarded in the storm’s aftermath. Complicating matters, Gov. Rosselló is clashing with a federal oversight board that has tried to enlarge its sphere of influence at his administration’s expense.

House Republicans on Monday night unveiled legislation that would authorize $81 billion in disaster aid for victims of recent storms, a move that quickly drew backlash from conservatives about its impact on the federal deficit, the Wall Street Journal reported. Republicans said that the bill was aimed at providing help for storm-battered and fire-stricken areas in Texas, Florida, California, Louisiana, Puerto Rico and the U.S. Virgin Islands. House Republicans from Texas and Florida praised the aid package, nearly double the $44 billion the White House had requested last month to help states recover this year’s devastating storms. House GOP lawmakers from the two state delegations met yesterday to discuss the deal, which many had said was needed before they would support spending bills that must pass this week to avoid a government shutdown. The government’s current funding expires at 12:01 a.m. on Dec. 23.

The Trump recovery imprint has been far clearer in Gulf Coast states hit by hurricanes this year than on Puerto Rico, according to a New York Times editorial. A double standard in the law was quickly clear after the storm when a federal cap on Puerto Rico’s food stamps limited the amount of emergency food aid. Texas and Florida had no such restraints after their hurricanes, according to the editorial. As of last week, only about 60 percent of Puerto Rico’s power had been restored. Power remains the key to ever regaining normalcy in business, education and home life. But the island is suffering the longest blackout in U.S. history. An estimated 700 temporary generators are providing emergency power, with officials hoping for something more permanent no earlier than next summer. The island was reeling under $74 billion in debt even before the hurricane hit, and its news tends to get worse, not better. Its government counted a death toll of 64 in the first 42 days after the storm, but a detailed survey by The Times found that 1,052 more people than usual had died. Nearly half of Puerto Rico’s residents rely on Medicaid, which is not as well funded federally on the island as it is in the states. The problems are compounded by a looming financial crisis that experts say could leave a quarter of the island’s residents without medical care early next year unless Congress and the Trump administration extend special help.

The governor of Puerto Rico is requesting Congress send billions of dollars in emergency relief before the end of the year as the U.S. territory continues to repair after being pummeled by summer hurricanes, the Washington Examiner. reported. Noting that Congress is set for recess in the coming days, Puerto Rican Gov. Ricardo Rosselló said in a letter on Saturday to congressional leaders of both parties: "I implore you to use this critical window of opportunity" to approve the funding. He said that the funding would be used for housing and infrastructure and "to recover in a manner that makes Puerto Rico more resilient in the future so that we can avoid a crisis of this scale from ever happening again." Rosselló asked the federal government for $94 billion in mid-November to help the island's 3.4 million residents after Congress already approved a spending law that provided $5 billion in aid.

Post Hurricane Maria, there is no capacity for Puerto Rico to make any debt payments in the coming decade, and the entire debt stock will need to be massively written-down to make the island’s recovery feasible, according to a commentary in the Washington Post. Before the hurricanes hit Puerto Rico, the situation was already dire. The island was suffering the consequences of a decade-long recession and the largest wave of outmigration since the 1950s. The governor declared the $74 billion debt unpayable, and the public pension fund, with about $50 billion in obligations, reached a zero-funding level, unprecedented in the United States. The governor and the island’s oversight board — which Congress put in place in 2016 to deal with the island’s fiscal situation — recognized the dire circumstances and initiated a form of court-supervised bankruptcy last May. Hurricane Maria simply leaves no doubt that Puerto Rico’s fiscal plan has to be rethought, according to the commentary. Revenue will be far lower than expected, and, thus far, the federal response has provided inadequate funding for recovery and reconstruction.