CFPB Moves to Delay Implementation of Debt-Collection Rules

The Consumer Financial Protection Bureau yesterday proposed postponing the implementation of two new Fair Debt Collection Practices Act rules governing borrower communication, which currently have a Nov. 30 start date, the American Banker reported. One rule delineates what constitutes harassment, false representation and unfair practices by debt collectors. The other clarifies the disclosures collectors must provide to consumers regarding communication with credit-reporting agencies and prohibits collectors from threatening to sue borrowers with time-barred debt. The delay would mean that third-party mortgage-servicing entities and others governed by the FDCPA will not be able to use the new safe harbors for compliance until Jan. 29, 2022. The proposal has a 30-day comment period.​​​

Most Big Debt Collectors Backed Off During the Pandemic. One Pressed Ahead.

When COVID-19 hit the economy, most debt collectors gave borrowers a break, cutting back on lawsuits amid lockdowns, closed courts and loan-forbearance initiatives. One of the biggest and least-known companies in the industry did the opposite, the Wall Street Journal reported. Sherman Financial Group filed more lawsuits to squeeze cash from people behind on their credit card bills. A Wall Street Journal analysis, based on the five state court districts with searchable online records, showed that Sherman had the largest year-over-year increase of any firm identified between last March 15 and Dec. 31 — up 52% from the year-earlier period, compared with a 24% decline in those districts for the industry as a whole. Sherman, a privately held enterprise, through its subsidiaries filed 15,420 more debt-collection lawsuits in those districts than during the year-earlier period. Those courts serve 13% of the U.S. population. In doing so, Sherman has cemented its reputation as a maverick in the industry. Since founding the company two decades ago, Sherman Chief Executive Ben Navarro has helped transform the once small and fragmented business of collecting old credit card debt into a multibillion-dollar industry dominated by huge firms. And while many of his competitors have retrenched during economic downturns, Navarro has capitalized on them, expanding in the wake of the 2008 financial crisis and bucking industry trends during Covid. During the pandemic, most of Sherman’s largest rivals filed fewer new lawsuits, citing borrower hardship. Two publicly traded competitors, PRA Group and Encore Capital Group, both sued fewer people in 2020 than in 2019, and they limited new collection efforts. California-based Oportun Financial Corp. suspended new lawsuit filings, dismissed pending cases and capped the interest rate on its loans. A spokesman for Sherman and Navarro, its majority owner, said that while the company has filed more lawsuits during the pandemic than a year earlier, it also owned more debt during that period. In the last nine months of 2020, the spokesman said, Sherman’s debt-collection arm, Resurgent, sued a smaller percentage of its debtors than in prior years. The company declined to disclose specifics about the amount of additional debt it holds or the percentage of borrowers it has sued. (Subscription required.)​​​​​​

Weekly Jobless Claims Higher than Expected​​​​​

First-time claims for unemployment insurance rose more than expected last week despite other signs of healing in the jobs market, the Labor Department reported Thursday, CNBC.com reported. First-time claims for the week ended April 3 totaled 744,000, well above the expectation of 694,000 from economists surveyed by Dow Jones. The total represented an increase of 16,000 from the previous week’s upwardly revised 728,000. The four-week moving average edged higher to 723,750. The news comes a week after signs of more aggressive healing in the labor market, as nonfarm payrolls in March increased by 916,000 while the unemployment rate fell to 6%. That was the biggest job gain since August, though unemployment remains well above the pre-pandemic low of 3.5%. Continuing claims provided some good news on the labor front, with the total dropping 16,000 to 3.73 million. That’s the lowest level for continuing claims since March 21, 2020, just after the Covid pandemic hit and companies instituted wholesale layoffs in conjunction with the economic shutdown.​​​​​

After Pandemic, Shrinking Need for Office Space Could Crush Landlords

As office vacancies climb to their highest levels in decades with businesses giving up office space and embracing remote work, the real estate industry in many American cities faces a potentially grave threat, the New York Times reported. Businesses have discovered during the pandemic that they could function with nearly all of their workers out of the office, an arrangement many intend to continue in some form. That could wallop the big property companies that build and own office buildings — and lead to a sharp pullback in construction, steep drops in office rents, fewer people frequenting restaurants and stores, and potentially perilous declines in the tax revenue of city governments and school districts. In only a year, the market value of office towers in Manhattan, home to the country’s two largest central business districts, has plummeted 25 percent, according to city projections released on Wednesday, contributing to an estimated $1 billion drop-off in property tax revenue. JPMorgan Chase, Ford Motor, Salesforce, Target and more are giving up expensive office space, and others are considering doing so. Jamie Dimon, chief executive of JPMorgan Chase, the largest private-sector employer in New York City, wrote in a letter to shareholders this week that remote work would “significantly reduce our need for real estate.” For every 100 employees, he said, his bank “may need seats for only 60 on average.” Owners of office buildings, many of which are owned by pension funds, insurance companies, individuals and other investors, could be pummeled if many businesses rent less space. “The pandemic has proven that work from home is viable,” said Jonathan Litt, chief investment officer of Land & Buildings, a real estate investment firm that has taken a bearish view of the New York office market. “It’s not going away; businesses are going to adjust, and office real estate is going to take it on the chin during that adjustment period.”

Cruise Industry Spars with CDC over How to Restart Sailings

Cruise operators are pushing federal health authorities to let voyages begin in July, but the two sides are clashing on how to restart voyages, the Wall Street Journal reported. The industry argues that the Centers for Disease Control and Prevention’s latest guidance that travel poses low risks for fully vaccinated individuals should apply to cruises, too. It wants the agency to scrap its plans for a phased sailing restart that has been in place since the fall. “We’d just like to be treated similar[ly] to the rest of [the] travel and entertainment and tourism sector,” Carnival Corp. Chief Executive Arnold Donald said yesterday. The CDC still recommends against travel on cruise ships because of what it calls a very high risk of COVID-19 on such vessels. And while the agency is sticking with the phased approach, it recently pointed to the possibility of a summer restart of service. The agency’s “goal aligns with the desire for resumption of passenger operations in the U.S. expressed by many major cruise-ship operators and travelers, hopefully by midsummer,” a CDC spokeswoman said yesterday. Cruise operators haven’t sailed from the U.S. for about a year since the coronavirus outbreaks brought voyages to a halt. (Subscription required.)

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