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CFPB Finds Percentage of Borrowers with $20K in Student Debt Doubled over Last Decade

ABI Bankruptcy Brief
ABI Bankruptcy Brief
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August 17, 2017

 
ABI Bankruptcy Brief
 
 
 
 
NEWS AND ANALYSIS

CFPB Finds Percentage of Borrowers with $20K in Student Debt Doubled over Last Decade

The Consumer Financial Protection Bureau (CFPB) yesterday released a new report finding that nearly half of student loan borrowers leave school owing at least $20,000 – double the share of borrowers a decade ago, according to a press release. The Bureau also found that more borrowers are taking out student loans later in life, and fewer borrowers are paying down their student debt in five years. A separate CFPB report found that record student debt and associated borrower stress is spurring more employers to offer student loan repayment benefits to their employees.
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Now available in the ABI Bookstore: Pick up your copy of the updated and revised Graduating with Debt: Student Loans under the Bankruptcy Code, Second Edition!

Household Debt Hits New Record High, Credit Card Delinquencies Rising

Household debt hit a new record high in the second quarter of 2017, and credit card delinquencies are on the rise, according to a new report from the Federal Reserve Bank of New York on Tuesday, the Washington Examiner reported. The report marked the first time since 2009, when the country was still reeling from the financial crisis, that the economy saw a year-over-year rise in people falling behind on credit card payments. Total household debt rose $114 billion in the second quarter to $12.84 trillion, according to the report, eclipsing the previous all-time peak set in the first quarter. Researchers at the New York Fed noted that, unlike in 2008 when the level of debt first approached $13 trillion, there isn't a lot of questionable mortgage debt this time around. The release also showed aggregate student debt flat at $1.34 billion, and that the delinquency rate for student loans rose to 11.2 percent in the quarter.
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Be sure to check out today's Chart of the Day.

FHFA: HARP Extended Through 2018

The Federal Housing Finance Agency (FHFA) announced today that it is extending the Home Affordable Refinance Program (HARP) through Dec. 31, 2018, HousingWire.com reported. HARP was set to end on September 30 this year. In June 2014, then-Department of the Treasury Secretary Jacob Lew announced a series of initiatives designed to spur the flailing housing market, including the extension of the Home Affordable Modification Program until Dec. 31, 2016. Later, in May 2015, the FHFA announced that it was extending the deadline for HARP to the end of 2016 as well, matching the deadline of the Home Affordable Modification Program (HAMP). But about a year ago, the FHFA again announced that it was delaying the end of HARP, this time until Sept. 30, 2017. At the time, the FHFA said that it was extending the crisis-era refinance program until Sept. 30, 2017, in order to “create a bridge” to a new refinance product it was planning to launch in October 2017. The program will see Fannie Mae and Freddie Mac implement a new streamlined refinance offering aimed at borrowers with high loan-to-value ratios. The FHFA said today that the new high-LTV refinance program is still set to launch in October, but the program is being modified slightly, which necessitates extending the HARP deadline through all of 2018.
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TransUnion: Mortgage Delinquencies Hit New Post-Recession Low

Mortgage delinquencies are continuing to fall, hitting a new low in the second quarter, a report from TransUnion, one of the three largest credit reporting agencies in the U.S., showed, HousingWire.com reported yesterday. This confirms Tuesday’s report from S&P Dow Jones Indices and Experian, which showed that the average mortgage default rate hit its lowest level in a decade. Experian is also one of the nation’s largest credit reporting agencies, explaining the similar findings in both reports. TransUnion’s report showed that mortgage delinquency rates dropped below 2 percent for the first time in nearly 10 years as it hit 1.93 percent in the second quarter. This is down 16.5 percent from the second quarter of 2016, when it decreased to 2.3 percent.
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Minnesota Attorney General Sues Companies that Allegedly Bilked Veterans and Seniors

The Minnesota attorney general’s office yesterday filed suit against two companies that it said pressured desperate military veterans and senior citizens to sign over large portions of their monthly pension payments in exchange for loans of small sums of money, the Minneapolis Star Tribune reported today. The loans, known as “pension advances,” often charged annual percentage rates of 200 percent and extended for as long as 10 years. The companies aggressively targeted consumers with poor or bad credit, the suit alleges. The companies, which are the target of multiple state and federal investigations, issued the loans to veterans who receive pensions or disability benefits and to senior citizens with private-sector pensions. They are part of an industry that has been criticized for a lack of transparency and questionable business practices. “By signing away your pension rights for years to come, you often end up making a bad financial situation far worse because you are forfeiting the right to have hundreds of dollars of future financial payments,” Minnesota Attorney General Lori Swanson said. The lawsuit was filed against Future Income Payments, of Delaware, and FIP, of Nevada. Both companies list the same address. A company representative in Henderson, Nev., said it would have no comment, but the company’s website indicates it does not do business in Minnesota.
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Open for Business: ABI’s Winter Leadership Conference Returns to Palm Springs with an Extraordinary Program Lineup!

Join ABI for the 29th Annual Winter Leadership Conference at the beautiful La Quinta Resort & Club in Palm Springs, Calif., from Nov. 30-Dec. 2. The conference features topics designed for consumer and business practitioners, as well as financial advisors. It also includes an ethics session that focuses on social media. Nine joint ABI educational sessions provided by ABI’s committees are in the lineup, along with ABI’s newest plenary trend — ABI Talks — and 13 topical sessions, providing up to 8.25/10 hours of CLE/CPE credit and 2 hours of ethics! The luncheon this year will be a celebration of ABI’s Inaugural “40 Under 40” class, and the Final Night Dinner is sure to be a “magical” evening with a jaw-dropping performance by Drew Thomas of “America’s Got Talent.” As always, the Winter Conference will also provide numerous social and fun events for networking and renewing friendships with colleagues from around the nation, all in a unique and stylish setting. Click here to register!

Participate in Next Consumer Commission Meeting on Sept. 15 at NABT

The Committee on Chapter 7 of the ABI Commission on Consumer Bankruptcy will hold a public meeting during the National Association of Bankruptcy Trustees (NABT) on September 15 from 12:30 to 2:00 PM in the Marriott New Orleans in New Orleans, Louisiana. Attendees are invited to speak at the public meeting. For more information, including submission guidelines, please click here.

A list of topics under consideration by the Commission is available on the Commission’s website at https://consumercommission.abi.org/. To submit any comments or suggestions for the Commission, please e-mail consumercommission@abiworld.org.

Read available written testimony from the 7/15 open meeting at NACTT’s annual seminar by clicking at the bottom of this page (linked by name).

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BLOG EXCHANGE

New on ABI’s Bankruptcy Blog Exchange: Credit Card Delinquencies: Fair Price for Growth, or Bad Sign?

New N.Y. Fed data shows that balances 90 days past due are noticeably higher in 2017, according to a recent blog post. Though the trend has a lot to do with positives like economic expansion and easier access to credit, officials said that it deserves careful attention.

To read more on this blog and all others on the ABI Blog Exchange, please click here.

 
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