On June 19th, 2020, the U.S. Small Business Administration (SBA) and the U.S. Department of the Treasury made a joint announcement that they will make additional data public regarding the Paycheck Protection Program (PPP), in agreement with leaders of the U.S. Senate Small Business Committee. In doing so, they will make a concerted effort to facilitate the interests of both transparency of data and protection for small businesses who receive PPP loans.
a Human Touch
The Perfect Balance
The U.S. Small Business Administration (SBA) announced today that it has reopened the Economic Injury Disaster Loan (EIDL) and EIDL Advance program portal to all eligible U.S. small businesses, private non-profit organization or 501(c)(19) veterans organizations, who are experiencing economic impacts due to COVID-19. The EIDL program, established by the CARES Act, offers long-term, low interest assistance that can alleviate temporary loss of revenue and help cover payroll and inventory, pay debt or fund other expenses.
According to the Pew Research Center’s data analysis of the Federal Reserve Board’s 2018 Survey of Household Economics and Decisionmaking, Americans owed about $1.5 trillion in student loans in March of this year, which is two times higher than what they owed ten years ago. The increase in student loan debt across the nation is linked to a historically high share of young adults going to college and the rising cost of higher education.
While we still await updates, these California fires are being named the deadliest in the state’s history. At time of writing, the number of deaths from the Camp Fire in Northern California has risen to 77 while over 900 people remain missing. According to recent updates by Cal Fire, the Camp Fire has burned approximately 151,000 acres, causing over 40,000 residents to abandon their homes and find safety.
The Woosley Fire has burned more than 96,000 acres and numerous homes, and the Hill Fire in Ventura County has burned over 4,000 acres, including RVs and outbuildings. While the Hill Fire is fully contained, the Camp Fire is 66 percent contained and the Woolsey Fire is 94 percent contained. No matter how close your home or business is to wildland areas, it’s always best to be prepared in case of emergency evacuation, prepare your home to mitigate potential for damage, and have knowledge of your local and national recovery resources.
The U.S. Small Business Administration (SBA)’s Administrator Linda McMahon announced that the SBA will provide disaster loan assistance to Florida businesses, homeowners and renters affected by the recent Hurricane Michael, following the Presidential disaster declaration for Mexico Beach, Florida and nearby areas.
A recent report from the U.S. Small Business Administration (SBA)’s Office of Advocacy assesses changes in bank lending to small businesses in comparison to levels during the financial crisis. Following a review of banks of varying sizes and financial health, findings reveal a slow recovery in the small business loan market and a more pronounced growth in the total business loan market.
House Democrats and Republicans have introduced legislation to stop the recently finalized Consumer Financial Protection Bureau (CFPB) small dollar lending rule. The rule, which was issued by former CFPB Director Richard Cordray, aimed to protect consumers from the negative consequences of “payday loans” which are usually small-dollar amounts that are due in full before the borrower’s following paycheck.
Servicing FHA Loans continues to be challenging and, in many instances, includes high losses on default liquidated loans. While FHA delinquencies have greatly improved compared to post crisis delinquency, there are still over 7.8 million outstanding FHA insured loans with delinquency rates that rose as high as 11.25 percent according to the FHA Single Family Loan Performance Trends report published by HUD this past January.
When working with FHA Loans in default, there are many key time frames that must be met in order to minimize losses, beginning as soon as the date the loan was last contractually current, and continuing throughout the claim filing process. In many cases just missing the start of a foreclosure action by one day can result in increased losses of thousands of dollars. Failure to meet all time frames will not only result in interest curtailments, but ultimately the curtailment of advances as well. These losses can be further exacerbated depending on the type of pool, the Servicer’s ability to limit interest rate spreads, and time required to resolve. Additionally, if there was a missed time frame, FHA will only pay debenture interest to the point of the interest curtailment. After the interest curtailment, HUD will no longer pay debenture interest on the Unpaid Principle Balance.
To put things in perspective, if an FHA loan has an Unpaid Principle Balance of $150,000 with an interest rate of 3.5 percent, and you miss the first legal action for foreclosure, and it takes an additional 24 months to convey, the Servicer stands to lose $10,500 in interest alone. In addition to interest curtailments, the Servicer must fully comply with the allowable fee schedule for all legal actions and property preservation expenses. Overhead costs as well as any fees or costs associated with clearing title issues are not reimbursable or recoverable through a claim to HUD.