Here are three of the week's top pieces of financial insight, gathered from around the web:
Extra scrutiny for PPP borrowers
"Efforts to root out scammers in the two largest federal loan programs are sweeping up legitimate borrowers," said Peter Rudegeair and Liz Hoffman at The Wall Street Journal. Lenders in the $670 billion Paycheck Protection Program and $374 billion Economic Injury Disaster Loan program are on "high alert" for malfeasance "because they can face repercussions for facilitating fraud." Many of the unfairly suspected are sole proprietors or gig workers seeking relatively small loans. But the SBA has urged banks to "scrutinize business loans that are deposited into personal bank accounts." One Dallas-based lawyer says he has heard from "hundreds of small-business owners whose bank accounts were frozen after receiving government loans."
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Colleges cut fees for virtual classes
Bowing to pressure from students and families, some colleges are cutting tuition for the coming semester, said Lilah Burke at Inside Higher Ed. A diverse group of schools, including Princeton, Spelman College, Johns Hopkins, and Rowan University, are slashing tuition. The most common cut is 10 percent, but some schools are going much deeper. Thomas University is offering a 30 percent reduction. "The universities offering tuition discounts roughly fall into two categories:" selective schools with big endowments, and nonselective colleges that "need to cut tuition to stay competitive and attract students." Some changes could turn out to be long-lasting; the pandemic "has tightened a squeeze on pricing" already affecting many colleges.
Higher costs for home refinancing
Fannie Mae and Freddie Mac announced they will be raising fees for lenders on mortgage refinances, said Diana Olick at CNBC. Consumers are going to have to start paying more to refinance beginning in September, "which means it will basically apply to all refinances that aren't already in process." The increase will add 0.5 percent of the loan amount to the consumer's cost, amounting to roughly $1,400 on the average mortgage originated today. The two loan-buying entities made $4.3 billion in profit in the second quarter with the housing market surging and mortgage interest rates at an all-time low. But there are also growing concerns about Fannie and Freddie's ability to handle the 4 million borrowers who were granted temporary forbearance on their mortgages and will have to resume payments in a few months.
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