U.S. failed to stop loan program fraud, rep says
The U.S. failed to take basic steps at the start of the coronavirus pandemic to prevent fraud in a federal aid program intended to help small businesses, depleting the funds and making people more vulnerable to identity theft, the chairman of a House panel examining the payouts said Tuesday.
Democratic Rep. James Clyburn blamed the Trump administration for the problems in the COVID-19 Economic Injury Disaster Loan program, overseen by the U.S. Small Business Administration, amid revelations that as much as 20% of the money — tens of billions of dollars — may have been awarded to fraudsters.
Clyburn said the Biden administration has implemented measures to identify potential fraud and directed loan officers to address indications of fraud before approving loans, while Congress has invested in fraud prevention and accountability.
Rep. Steve Scalise, the No. 2 House Republican, said the Trump administration and Congress worked together at the beginning of the pandemic, when uncertainty was rampant and much of the economy was locked down, to deliver “much needed relief as fast as we could to help save as many jobs as we could” and prevent the economy from crashing.
Clyburn, of South Carolina, said the subcommittee will determine what more must be done to bring perpetrators of fraud to justice and how to protect future emergency programs.
California expands mortgage relief program
More California homeowners qualify for mortgage relief after the state on Tuesday expanded a COVID-19 program designed to help those who have fallen behind on their payments during the pandemic.
Homeowners who missed payments this year now are eligible for aid that previously was offered only to those who missed at least two payments before Dec. 27, 2021.
The money also now can be used to help with past-due property taxes, even for those whose mortgage payments are current, or for those who own their homes outright. And the state has upped the income limit to qualify — homeowners now are eligible for assistance if they make 150% or less of their county's median income.
Under the new parameters, the California Mortgage Relief Program estimates about 13,000 Bay Area households are eligible for relief.
Homeowners who missed at least two mortgage payments before June 30, 2022, now may be eligible to have delinquent payments of up to $80,000 covered. But eligibility depends on a household's income. In Alameda and Contra Costa counties, a family of four would have to make $214,200 or less per year to qualify. The cutoff is $279,600 in San Mateo county and San Francisco, and $252,750 in Santa Clara County.
Mortgage rates hit 5.78% in biggest weekly jump since 1987
Mortgage rates surged by more than half a percentage point this week amid rising inflation and an interest rate hike by the Federal Reserve, according to Freddie Mac. The jump is the largest oneweek increase since 1987.
The 30-year fixed-rate mortgage averaged 5.78% in the week ending June 16, up from 5.23% the week before. Rates have risen more than two-and-a-half percentage points this year. They were at an average of 2.93% this time last year.
“These higher rates are the result of a shift in expectations about inflation and the course of monetary policy,” said Sam Khater, Freddie Mac's chief economist. “Higher mortgage rates will lead to moderation from the blistering pace of housing activity that we have experienced coming out of the pandemic, ultimately resulting in a more balanced housing market.”
The average mortgage rate surged higher this week in response to worsethan-expected inflation data last week and in anticipation of Federal Reserve rate hikes that came Wednesday.
ers with high-yield savings accounts could be an exception. These accounts are known for aggressively competing for depositors.
Q What about stocks? Gulp!
A Free money from the Fed was amazing for the stock market.
Zero percent interest rates depress government bond rates, essentially forcing investors to bet on riskier assets like stocks.
Higher rates have been a major challenge for the stock market, which had become accustomed to — if not addicted to — easy money. U.S. stocks plunged into a bear market Monday amid fears that the Fed's aggressive rate hikes will crash the economy into a recession.
The ultimate impact to the stock market will depend on how fast the Fed raises interest rates — and how the underlying economy and corporate profits perform going forward.
At a minimum, rate hikes mean the stock market will face more competition going forward from boring government bonds.
Q Will inflation cool?
A Consumer prices spiked by 8.6% in May from the year before, the fastest pace since December 1981, according to the latest data from the Labor Department. Inflation is nowhere near the Fed's goal of 2% and has gotten worse in recent months.
Economists warn inflation could get even worse because gas prices have continued to hit record highs in recent days, exacerbating a spike that began after Russia invaded Ukraine.
Everything from food and energy to metals have become more expensive.
The high cost of living is causing financial headaches for millions of Americans and contributing significantly to recordlow consumer sentiment, not to mention President Joe Biden's low approval ratings.
Yet it will take time for the Fed's interest rate hikes to start chipping away at inflation. And even then, inflation still will be subject to developments in the war in Ukraine, the supply chain mess and, of course, COVID-19. Q What's next for mortgages?
A Rates on home loans have soared in recent months, mostly in anticipation