There has been much discussion on Student loan forgiveness, but The Fresh Start Through Bankruptcy Act of 2021 may be the first reform as it has support from both aisles. Currently most debt such as credit card & medical can be discharged in bankruptcy while student loans cannot be discharged unless you can prove a rare case of ‘undue hardship.’ This bill would allow Federal student loans to be discharged in bankruptcy. It would also hold Institutions accountable by requiring colleges with 1/3 of their students receiving federal student loans to partially refund the government if their student files bankruptcy. This would apply to the schools showing consistently high student loan default and low repayment rates.

Rates – ended the week close to where they started with a nice run yesterday that put the price of Mortgage Backed Securities back up above the 50 day moving average. A “Bullish Engulfing Pattern” (see chart) emerged which can signal a positive move in price (lower rates). Rates are roughly the same as this time last year.

Rents – are up nationwide 7% year over year for 1 bedrooms & 9% for 2 bedrooms. Single family rentals are up 7% as well. This index showed Portland prices remained steady with 1B renting for $1,400 and 2B renting for $1,730.

Inflation – The Producer Price Index, which measures wholesale Inflation, increased 1% in July. Even when you strip out the more volatile food and energy there was an increase of 0.9% and a year over year increase of 6.1% – the highest increase since the 12 month data was first collected in 2014. Of this increase in final demand services 20% can be attributed to automobiles and auto parts. For Intermediate demand 23% is attributed to the price of steel.

The Consumer Price Index was also released this week showing a 4.3% year over gain (down from 4.5% last month) when you strip out food and energy.

Lumber futures are down 50%. This should help with pricing for builders but it will take time to move through lumber wholesalers current inventory.

Jobs – approximately 12M folks are still receiving some type of unemployment benefits (down from a peak of 22M during the pandemic) up from pre-pandemic levels of 2M.

Mortgage Applications for purchase increased by 2% last week but are down 17.5% on a year over year basis. Cash buyers make up 23% of purchases (up from 16% this time last year). Refinances increased 3.2% from the previous week but are down 8.5% from last year. Refinances continue to make up roughly 68% of applications.

Forbearance – the Mortgage Bankers Association reported the share of mortgage loans in forbearance continues to decline, down to 3.4% or approximately 1.7M homeowners are in forbearance plans. Of folks exiting forbearance 23% have made their payments and 13% were reinstated (past due amounts paid back – this can include refinance, sale, or personal payment).

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