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Tag: default

  • Student loan borrowers in default may see wages garnished in 2026

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    The Trump administration said on Tuesday that it will begin garnishing the wages of student loan borrowers who are in default early next year.The department said it will send notices to approximately 1,000 borrowers the week of Jan. 7, with more notices to come at an increasing scale each month.Millions of borrowers are considered in default, meaning they are 270 days past due on their payments. The department must give borrowers 30 days notice before their wages can be garnished.The department said it will begin collection activities, “only after student and parent borrowers have been provided sufficient notice and opportunity to repay their loans.”In May, the Trump administration ended the pandemic-era pause on student loan payments, beginning to collect on defaulted debt through withholding tax refunds and other federal payments to borrowers.The move ended a period of leniency for student loan borrowers. Payments restarted in October of 2023, but the Biden administration extended a grace period of one year. Since March 2020, no federal student loans had been referred for collection, including those in default, until the Trump administration’s changes earlier this year.The Biden administration tried multiple times to give broad forgiveness to student loans, but those efforts were eventually stopped by courts.Persis Yu, deputy executive director for the Student Borrower Protection Center, criticized the decision to begin garnishing wages, and said the department had failed to sufficiently help borrowers find affordable payment options.”At a time when families across the country are struggling with stagnant wages and an affordability crisis, this administration’s decision to garnish wages from defaulted student loan borrowers is cruel, unnecessary, and irresponsible,” Yu said in a statement. “As millions of borrowers sit on the precipice of default, this Administration is using its self-inflicted limited resources to seize borrowers’ wages instead of defending borrowers’ right to affordable payments.”

    WASHINGTON —

    The Trump administration said on Tuesday that it will begin garnishing the wages of student loan borrowers who are in default early next year.

    The department said it will send notices to approximately 1,000 borrowers the week of Jan. 7, with more notices to come at an increasing scale each month.

    Millions of borrowers are considered in default, meaning they are 270 days past due on their payments. The department must give borrowers 30 days notice before their wages can be garnished.

    The department said it will begin collection activities, “only after student and parent borrowers have been provided sufficient notice and opportunity to repay their loans.”

    In May, the Trump administration ended the pandemic-era pause on student loan payments, beginning to collect on defaulted debt through withholding tax refunds and other federal payments to borrowers.

    The move ended a period of leniency for student loan borrowers. Payments restarted in October of 2023, but the Biden administration extended a grace period of one year. Since March 2020, no federal student loans had been referred for collection, including those in default, until the Trump administration’s changes earlier this year.

    The Biden administration tried multiple times to give broad forgiveness to student loans, but those efforts were eventually stopped by courts.

    Persis Yu, deputy executive director for the Student Borrower Protection Center, criticized the decision to begin garnishing wages, and said the department had failed to sufficiently help borrowers find affordable payment options.

    “At a time when families across the country are struggling with stagnant wages and an affordability crisis, this administration’s decision to garnish wages from defaulted student loan borrowers is cruel, unnecessary, and irresponsible,” Yu said in a statement. “As millions of borrowers sit on the precipice of default, this Administration is using its self-inflicted limited resources to seize borrowers’ wages instead of defending borrowers’ right to affordable payments.”

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  • Polarizing L.A. police official keeps post by default after City Council fails to vote

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    A polarizing figure on the Los Angeles Police Commission will retain his seat despite having never received an approval vote from the City Council.

    Erroll Southers, who previously served as president of the civilian panel that watches over the LAPD, has taken criticism for what critics say is his unwillingness to provide oversight of police Chief Jim McDonnell, while also facing renewed scrutiny in recent months for his past counterterrorism studies in Israel.

    For the record:

    9:33 a.m. Oct. 1, 2025An earlier version of this story reported that Erroll Southers’ nomination was not on the City Council’s agenda last week. Southers was on the agenda but the council continued the matter and took no vote.

    New members of any city commission must typically be approved by a City Council vote within 45 days of their nomination. Mayor Karen Bass put forward Southers in mid-August, but his first scheduled vote was delayed because he was traveling, and the council continued the matter without explanation at a meeting Friday in Van Nuys.
    Now that his 45-day window has elapsed, multiple officials told The Times that city rules allow Southers to continue in the position by default for a full five-year term because he was already serving on an interim basis.

    Around City Hall, news of the council’s inaction set off speculation about whether it was the result of a scheduling mix-up — or because Southers’ backers didn’t believe he could get enough votes.

    Failing to vote on a member of one of city’s most important and high-profile commissions is almost unheard of, said Zev Yaroslavsky, a former councilman and L.A. County supervisor now at UCLA.

    “They have responsibility to confirm or not confirm,” he said of the council. “I never understood why you would campaign for office, as hard as you campaign to get there, and not vote on something that’s as important to the public.”

    Appointed by the mayor, police commissioners act much like a corporate board of directors, setting the LAPD policies, approving its budget and providing oversight, including reviews of officer shootings and other serious uses of force.

    Southers, 68, has been a member of the panel since 2023, when Bass picked him to serve out the term of a departing commissioner.

    A former FBI agent and Santa Monica cop turned top security official at USC, Southers helped lead the nationwide search for the next LAPD chief. The position eventually went to McDonnell — who like Southers served as director of the school’s Safe Communities Institute.

    His backers say that Southers has been committed to his role, participating in numerous listening sessions with Angelenos to learn what qualities they wanted in a police chief. He has also become a regular presence at LAPD recruitment events and graduations.

    Zach Seidl, a mayoral spokesperson, praised Southers for his stewardship of the commission, saying the career lawman “brings deep knowledge of the police department’s operations, a commitment to the continued development of policies that further transparency and accountability, and trusted relationships with community members and law enforcement.”

    Teresa Sánchez-Gordon, a retired L.A. County judge, replaced Southers as commission president last month, after he served more than a year in the role.

    But more than any other commissioner, Southers has accumulated a loud chorus of detractors who oppose keeping him in the key oversight role.

    Although it has long been part of his resume, Southers’ work in the mid-2000s in Israel has especially become a lighting rod due to the ongoing crisis in Gaza.

    Last month, a United Nations commission accused Israel of committing genocide against Palestinians in Gaza in retaliation for the Hamas militant attacks that left 1,200 dead and 251 others kidnapped on Oct. 7, 2023.

    Israel’s military campaign has so far killed more than 66,000 people, the vast majority of them civilians, according to Gaza health officials and international aid groups.

    Although Southers has said little publicly about the conflict, he has previously described traveling to Israel and studying with the Israel Defense Forces to learn about anti-terrorism strategies for his academic work.

    His opponents have argued his writings suggest that authorities should use an individual’s public support for controversial causes as a potential warning sign of extremism. Such arguments, they say, can be used to justify the criminalization of minority groups or silence dissent.

    Southers weathered calls for his resignation from the commission last year after he was among the USC officials responsible for clearing encampments occupied by pro-Palestinian protesters on the school’s campus.

    Others have focused on his oversight of McDonnell. Far too often, critics say, he has let the chief off the hook after recent controversies. Most recently Southers and his fellow commissioners have faced calls to put more checks on aggressive behavior by LAPD officers toward journalists and nonviolent protesters.

    Shootings by police have also been a point of contention with Southers. LAPD officers opened fire 31 times in the first nine months of this year, already surpassing the total number of shootings in 2024.

    The commission ordered the department to present a report on the shootings, but that was not nearly enough to satisfy Greg “Baba” Akili, a longtime civil rights advocate with Black Lives Matter-Los Angeles who has frequently spoken out against Southers’ nomination.

    As commission president, he said, Southers seemed more willing to shut down public speakers at the board’s meetings than to question the department’s narrative of recent events.

    “It’s like having a member of the police force on the commission,” Akili said of Southers. “We don’t want to see just Black faces in high places: We want people who actually … uplift the public.”

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    Libor Jany

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  • Starwood, Artisan Default on El Segundo Office Loan

    Starwood, Artisan Default on El Segundo Office Loan

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    Starwood Capital and Artisan Ventures are on the brink of losing a 257,000-square-foot office building in El Segundo, The Real Deal has learned. 

    The firms have defaulted on an $84.8 million loan from MetLife Investment Management tied to the property, located at 1960 East Grand Avenue, according to a notice of default filed with L.A. County last month. 

    Starwood and Artisan, formerly known as Artisan Realty Advisors, is $960,800 behind on the loan, as of Jan. 25. Neither company responded to requests for comment. 

    The duo failed to “cure a covenant breach” and failed to pay default interest, among other things, all of which triggered a default. 

    MetLife provided the loan in 2020, records show, to finance Starwood and Artisan’s acquisition of the building and a neighboring parking lot for $133 million. The firms bought the property from Brookfield. 

    In 2022, Artisan and Starwood planned to redevelop the parking lot into 94,000 square feet of office space and a four-level parking structure, according to documents filed with the city of El Segundo’s planning department. The plans, however, were only in the beginning stages. 

    About 70 percent of 1960 East Grand Avenue is leased, according to online listings for the property. 

    The default comes after reports that Starwood and Artisan are in talks with another lender, Morgan Stanley, over $500 million in debt tied to the Pacific Coast Tower next door. 

    The companies are still in negotiations to extend or forgive the debt, to avoid default, according to sources familiar with the matter, given the office complexes are struggling with occupancy issues.  

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    Isabella Farr

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  • A Debt-Ceiling Crisis Would Hit The Housing Market Like A Hurricane

    A Debt-Ceiling Crisis Would Hit The Housing Market Like A Hurricane

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    Natural disasters like hurricanes and snowstorms tend to temporarily halt housing market activity in affected areas.

    If the United States breaches the debt ceiling, it would hit the housing market like a natural disaster. Whenever there is a major weather event, like a hurricane or snowstorm, the places directly in harm’s way see a steep decline in home selling and buying activity. For example, in October 2022, the number of homes that accepted an offer plummeted by over 50% year over year in the three Florida metros directly hit by Hurricane Ian, double the national decline. However, those markets mostly recovered by the new year. If the U.S. hits the debt ceiling, without a deal in Congress to raise the country’s borrowing limit, it would have a similar effect on the housing market. Home sellers and homebuyers would temporarily back off the market during the turmoil but would return once the dust settles.

    Locations Harmed Most By Debt Ceiling Crisis

    The United States may breach the debt ceiling sometime between June and August, and if that happens, the U.S. may miss payments to federal workers, contractors and vendors, or Social Security recipients to avoid defaulting on its debt. The length and severity of this economic disaster would depend on how long it takes Congress to raise the limit, which hinges on bipartisan cooperation.

    The economic harm would be most severe in places with a high concentration of federal employees, contractors, vendors and military personnel, such as Washington D.C. and Virginia Beach, VA. Anyone who is missing income would likely be reluctant to make a big financial commitment, like buying a home.

    Areas with the highest shares of older people will face the most disruption from missed social security payments, such as Florida and Maine. Retirees who rely on social security income will be hesitant to spend, which would be a drag on the economies in these places. The slowdown in economic activity may slow down homebuying overall.

    On the other hand, places like Salt Lake City and Minneapolis would be the least affected because they have relatively young populations and few federal employees.

    Mortgage Rate Volatility

    The broader housing market could still be affected by swings in mortgage interest rates. Fear about the U.S. defaulting on its debt would push rates up. That’s because the potential for default makes all U.S. investments riskier, including mortgages. However, increased recession risk would decrease mortgage rates. The White House has stated a debt default would result in millions of jobs lost and a decline in economic growth. In this scenario, rates would fall because the Fed would have to lower short-term interest rates to spur economic growth. The last time the debt ceiling was breached in August 2011, mortgage rates decreased.

    What Homebuyers Should Know

    If you are planning on buying a home this year, there is a chance that you might be able to get a better deal on a mortgage rate if and when the debt ceiling is breached. So follow the news, and ask your lender to provide updated information on any changes in the rate they can offer. However, mortgage rates could go up instead of down. To have the best of both worlds, lock in your interest rate now with a float-down option. A float-down option will enable you to take advantage if mortgage rates fall.

    However, even if you are lucky enough to get a relatively low rate, you may find that sellers have backed off the market because of economic uncertainty. The lack of inventory would be especially dire given that new listings are already down almost 20% from last year. A lack of supply could lead to more competition for homes on the market. To be prepared, get preapproved for a mortgage ahead of time and set alerts for homes that match your preferences on real estate apps like Redfin
    RDFN
    . That way, you can submit an offer quickly before someone else beats you to the punch.

    What Home Sellers Should Know

    With all the uncertainty around how big of an impact a breach of the debt ceiling might have on the economy and mortgage rates, I expect many potential home sellers to back off the market. If rates do fall, home sellers who brave the market may find themselves with multiple offers from buyers eager to take advantage of lower interest rates. However, if rates go up instead, home sellers may find it more challenging to match with a buyer.

    Home Sales And Prices

    All in all, I expect many potential home sellers to be scared off by the uncertainty. Sellers only have one chance to debut their home, while buyers can be more flexible about timing their offers. Therefore, I expect breaching the debt ceiling will constrict supply more than demand, and will negatively impact the volume of home sales more than level of home prices. And then once the debt ceiling is lifted, the housing market will return to normal, or at least normal for 2023.

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    Daryl Fairweather, Contributor

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