|NEWS AND ANALYSIS
CFPB: COSIGNING STUDENT LOANS CAN BE RISKY
The trend of cosigning student loans came under fire in a report released last Thursday by the Consumer Financial Protection Bureau, the Wall Street Journal reported on Friday. The CFPB's report warned that cosigners could find it harder to get access to other forms of credit for themselves or end up with higher interest rates on their future borrowing. Exacerbating the problem, according to the report, is that it is typically very difficult to get a cosigner removed from a private student loan. Private lenders are rejecting 90 percent of consumers who apply to have a cosigner removed from their loans, according to the report, and lenders provide little information to borrowers about how their cosigners can get removed. Read more. (Subscription required.)
Click here to read the CFPB report.
MOODY'S MAY REDUCE RATINGS ON $34 BILLION OF STUDENT LOAN BONDS
Moody's Investors Service said that it may lower ratings on about $34 billion of securities backed by U.S. government-insured student loans, Bloomberg News reported today. The review of portions of 57 transactions reflects the risk that some of the bonds from the deals may not be paid off by maturity amid a slowdown in how quickly borrowers are repaying the underlying loans, according to a statement from the credit grader. "Recoveries upon default would be very high, although the timing of such recoveries would depend on the transaction structures and voting rights upon default for each," Moody’s said yesterday. Read more.
ANALYSIS: INTEREST-ONLY MORTGAGES MAKING A COMEBACK
The second-largest provider of U.S. mortgages through brokers is bringing back a debt type that's almost disappeared since the financial crisis: Interest-only loans, Bloomberg News reported today. United Wholesale Mortgage plans next month to expand access to the mortgages to borrowers beyond the wealthiest Americans who use jumbo loans. Interest-only mortgages carry higher risks because they can leave homeowners facing a jump in their bills down the road. Home buyers will need to put down 20 percent, have credit scores of 720, and their eventual payments can’t exceed 42 percent of their income. The debt, which will have interest rates that start to adjust after five years, requires borrowers to begin paying down the loans after 10 years. Read more.
FED'S POWELL SEES POTENTIAL FOR INTEREST RATE INCREASE BY SEPTEMBER
Federal Reserve Governor Jerome Powell said he expects the U.S. central bank to begin raising short-term interest rates in September, with a second rate increase coming in December, the Wall Street Journal reported today. "If my forecast for the economy were to be realized -- and that forecast includes significantly stronger growth than we realized in the first quarter of the year, continued progress in the labor market and a greater basis for confidence that inflation is returning to [the Fed's] 2 percent goal over the medium term -- if those things were realized, I feel that...it will be time as soon as, potentially as soon as September," Powell said today. The Fed will likely raise rates at a gradual pace, Powell said, in part because inflation is expected to continue undershooting the central bank’s 2 percent annual target. The precise timing and pace of rate increases will depend on incoming economic data, he said, and officials don’t want to "fall into a pace of mechanical increases." Read more. (Subscription required.)
THURSDAY! FREE REGISTRATION FOR ABI LIVE WEBINAR EXAMINING THE PRACTICAL IMPACT OF CHAPTER 11 COMMISSION RECOMMENDATIONS ON PREFERENCE REFORM
The ABI Young and New Members and Bankruptcy Litigation Committees will present a free abiLIVE webinar on June 25 to explore the ABI Chapter 11 Reform Commission Report's recommendations regarding the preferential transfer statute in Sect. 547. This webinar will examine the rationale behind the recommendations, such as the good faith belief for filing a demand letter or preference complaint, the increase in the statutory minimum to bring a preference action, venue reform for small-dollar cases and more. Most importantly, the panel will assess the practical effects and foreseeable impact of implementing these recommendations. This webinar is a must-attend for attorneys who regularly represent creditors, liquidating trustees, and panel trustees in preference actions. Click here for more information and to register for free!
MISS ABI’S TELECONFERENCES EXAMINING SUPREME COURT RULINGS IN BANKRUPTCY CASES? ARCHIVE REPLAYS AVAILABLE IN THE NEWSROOM!
ABI media teleconferences featuring experts discussing the Supreme Court's recent decisions in the six bankruptcy cases before the Court for consideration during the 2014 term. Teleconferences were held on the following cases:
- Baker Botts, LLP v. ASARCO, LLC on June 18. Click here to listen.
- Consumer Case Round-Up on June 3 (Bullard v. Hyde Park Savings Bank, Harris v. Viegelahn and Bank of America v. Caulkett and Bank of America v. Toledo-Cardona). Click here to listen.
- Wellness International Network, Limited v. Sharif on May 26. Click here to listen.
NEW FRAUD AND FORENSICS BOOK AVAILABLE FOR PRE-ORDER IN ABI'S BOOKSTORE!
Now available for pre-order in the ABI Bookstore is Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case. Cases such Madoff and Enron have hinged on the ability of talented investigators to uncover the truth amidst layers of fraud, and this book highlights the areas of specialty, challenge and reward for forensic accountants and the professionals who work with them in commercial fraud cases. Written by members of ABI's Commercial Fraud Committee among other noted professionals, Fraud and Forensics provides a broad and deep look at the challenges faced in the course of a commercial fraud matter, as well as the tools available to help identify, unwind and prove fraudulent transactions. This book will also assist both forensic accountants and the professionals who work with them to sift through the fine details while creatively considering all of the possibilities to fit together the pieces of a fraud puzzle. Click here to pre-order. (Book to be shipped in mid- to late July; make sure to log in to obtain the ABI member price).
ABI LIVE WEBINAR ON JULY 8 TO EXAMINE CHAPTER 11 REFORM COMMISSION'S RECOMMENDATIONS ON PROFESSIONAL FEES AND EXPENSES
Don't miss the abiLIVE webinar on July 8 examining the Chapter 11 Reform Commission's recommendations on professional fees and expenses. The panel will discuss the recommended reforms that provide for more effective oversight, as well as alternative fee structures consistent with professionals’ ethical obligations under the Code of Professional Responsibility. Click here to register.
ABI WORKSHOP TO FEATURE BANKRUPTCY JUDGES EXAMINING COMMISSION RECOMMENDATIONS ON RESOLVING COURT SPLITS
The 2015 Bankruptcy Judges Roundtable, an ABI Workshop, will take place at ABI headquarters on Aug. 4, to examine the Chapter 11 Reform Commission's recommendations on resolving court splits. The Commission identified more than 30 splits in case law on important bankruptcy issues. Attend the program from 3:00-4:30 p.m. ET in person or via live webstream to hear five bankruptcy judges discuss the recommendations and issues surrounding the court splits. Speakers on the program are Bankruptcy Judges Dennis R. Dow (D. Mo.), Bruce A. Harwood (D. N.H.), Barbara J. Houser (N.D. Texas), C. Ray Mullins (N.D. Ga.) and Eugene R. Wedoff (N.D. Ill.). ABI will seek 1.5 hours of general CLE credit in 60-minute-hour states and 1.5 hours of credit in 50-minute-hour states for the program. Networking reception to follow from 5-7 p.m. ET for in-person attendees, and registration for just the reception is also available. Click here to register.
NEW CASE SUMMARY ON VOLO: YOUNG V. YOUNG (IN RE YOUNG; 8TH CIR.)
Summarized by Bruce Weiner of Rosenberg, Musso & Weiner
The Eighth Circuit affirmed the bankruptcy court's imposition of sanctions on debtor's counsel for mischaracterizing post-petition alimony as pre-petition and for certifying that the debtor was current on alimony payments when she knew that the debtor was not current. Because of counsel's mischaracterizations and false statements, the chapter 13 trustee withdrew an objection to confirmation and the court confirmed the debtor's chapter 13 plan. Failure to pay post-petition alimony is grounds for dismissal of the case, and the court could not confirm the plan unless the debtor was current.
There are more than 1,700 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI's Volo website.
NEW ON ABI'S BANKRUPTCY BLOG EXCHANGE: CONSUMER DEBT INCREASED IN APRIL
A recent blog post examines Federal Reserve data showing that consumer debt increased in April as credit card use surged.
To read more on this blog and all others on the ABI Blog Exchange, please click here.
INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 23 member associations worldwide with more than 9,800 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.
Have a Twitter, Facebook or LinkedIn Account?
Join our networks to expand yours.