WASHINGTON–Unless the federal government acts, credit unions will want to brace for an influx of members under financial pressure and missing payments in the near term, as a number of aid and assistance programs are set to expire.
While Congress has approved more than $3 trillion in various aid packages and programs, and also joined many states in putting in place moratoriums related to evictions, student loan payments and more in response to the coronavirus pandemic, many of those programs and moratoriums are about to lapse.
The government approved more than $2 trillion of extra spending after the coronavirus brought swaths of industry and commerce to a sudden halt. Some measures targeted those who took the biggest hit, like the unemployed and small business. Others were across-the-board, reaching every corner of the economy.
The Trump Administration has indicated its support for additional relief, although it wants the cost of any new legislation capped at $1 trillion, before Congress goes into recess in early August. A $3.5-trillion package of aid passed by the House has died in the Senate.
Expiring Programs
Bloomberg News has compiled a list of programs/aid set to expire, including:
- Unemployment insurance: The federal government added $600 a week to state-provided jobless benefits under the CARES Act. Those extra payments run out in the final week of July.
- Assistance to airlines: The government handed $25 billion in payroll support to America’s passenger airlines to help them retain staff through the end of September, as well as offering loans worth a similar amount. The carriers have already signaled that layoffs will likely start as soon as that program expires, noted Bloomberg.
- Paycheck Protection Program. The deadline to apply for the more than $132 billion still available is Aug. 8.
- The CARES Act froze repayments through the end of September on student loans owned by the federal government, which make up about three-quarters of the $1.54 trillion total. Bloomberg noted that even in 2019, with unemployment at half-century lows, about 11% of student debt was delinquent.
- Mortgage borrowers. The CARES Act set up a forbearance program that covered federally insured mortgages. The total payments on loans that qualify for the plan would be about $55 billion a month, the New York Fed estimates. The Mortgage Bankers Association said this week that 8.2% of loan balances, owed by an estimated 4.1 million homeowners, were in forbearance, both Bloomberg and CUToday.info have reported.
- Rent. The CARES Act imposed a freeze on evictions through July 25 for multifamily properties whose mortgages are financed by federal agencies. Owners who benefited from mortgage relief have been barred from evicting tenants after that date too, for as long as their loans are in forbearance. The FHFA has extended safeguards through at least Aug. 31 for tenants of single-family homes with federally insured mortgages. The federal measures cover about 12.3 million homes. Bloomberg noted about one-third of tenants who responded to the Census Bureau’s Household Pulse survey during the first week of July said they had little or no confidence that they could make next month’s payment.