SENATE DEMOCRATS OFFER STUDENT DEBT REFINANCE BILL
Senate Democrats unveiled legislation yesterday to allow millions of Americans with student loan debt to refinance at lower interest rates, Reuters reported yesterday. Democrats said their measure would let holders of both federal and private undergraduate loans -- some with rates of 9 percent or higher -- to refinance at 3.86 percent. "When interest rates are low, homeowners, businesses and even municipalities refinance their debt. But right now the government doesn't offer a refinancing option to students," said Sen. Elizabeth Warren (D-Mass.), the primary sponsor of the bill. "Allowing students to refinance their loans would help give them a fair shot at an affordable education." Last year, Congress approved the Bipartisan Student Loan Certainty Act of 2013, which set the undergraduate student loan interest rate at 3.86 percent for the current school year. Democrats said that the nonpartisan Congressional Budget Office will determine the cost of their bill, which would permanently let student-loan borrowers refinance at the going rate. Read more.
For more information on the student loan debt crisis, be sure to attend ABI's Student Loan Debt Symposium on May 30 at Georgetown University Law Center, featuring scholars, consumers, practitioners and policymakers examining the student debt crisis and possible solutions.
COMMENTARY: HOW STUDENT DEBT MAY BE STUNTING THE ECONOMY
There is a growing body of evidence that rising levels of student loan debt are restraining the ability of young adults to enter the "grown-up" economy -- to buy a car and to buy a home and start filling it, according to a commentary in yesterday's New York Times. While the overall level of student debt may not measure up to that of mortgages -- $8.2 trillion -- it is highly concentrated among a small slice of people, those in their 20s and 30s, who are the engines of a great deal of economic activity. One of the crucial reasons the housing market has not expanded enough to support robust economic growth is that young adults are not setting up their own households at anywhere near the historical norm, according to the commentary. In the not-too-distant past -- until just before the 2008 financial crisis, to be precise -- around 30 percent of 27- to 30-year-olds had debt issued backed by a home. Even more interesting, 33 percent of the people in that age bracket also had student loan debt. But since then, the proportion of 27- to 30-year-olds with mortgages has plummeted to around 22 percent, according to the New York Fed data, which is also consistent with the trends in homeownership identified by the Census Bureau and other data sources. Read the full commentary.
MBA: MORTGAGE DELINQUENCIES AT LOWEST LEVEL SINCE 4Q 2007
The Mortgage Bankers Association reported today that the delinquency rate on home mortgages in the U.S. fell in the first three months of the year to its lowest level in six years, Reuters reported. The seasonally adjusted delinquency rate on all home loans fell to 6.11 percent in the first quarter from 6.39 percent in the prior three months. That left the rate at its lowest level since the fourth quarter of 2007. Fewer homes entered the foreclosure process during the first three months of the year, with seasonally adjusted foreclosure starts down 0.45 percent from 0.54 percent the previous quarter. Foreclosure starts have declined for five of the last six quarters. Foreclosure inventory was also at its lowest level since the first quarter of 2008, falling to 2.65 percent. The share of homes considered seriously delinquent also fell, dropping to 5.04 percent. Seriously delinquent homes are those that are at least 90 days late on their mortgage payments or are in the foreclosure process. Read more.
For more information on mortgage delinquencies, be sure to check out ABI's Chart of the Day.
SENATE BANKING COMMITTEE PASSES BILL TO WIND DOWN FANNIE MAE, FREDDIE MAC
The Federal Reserve warned that it may need to take additional action to rein in banks' funding of corporate takeovers after observing continued deterioration of lending standards this year, the Wall Street Journal reported yesterday. The statements by a Fed official in remarks prepared for a regulatory conference were the latest warning that U.S. regulators want banks to end practices they see as risky in so-called leveraged lending markets. The Fed and the Office of the Comptroller of the Currency told banks in March 2013 to avoid funding takeover deals that would leave companies with high levels of debt. "Judging from aggregate market data, it appears that many banks have not fully implemented standards set forth" in the March 2013 guidance, said Todd Vermilyea, senior associate director in the Fed's Division of Banking Supervision and Regulation. The statement was unusual for the Fed, which has sent private letters telling banks to change their policies but hasn't spoken much about the issue in public. Vermilyea acknowledged that prior warnings from regulators haven't had the desired effect, noting that industry-wide data have shown that "terms and structures of new deals have continued to deteriorate in 2014." Read more. (Subscription required.)
NEW CASE SUMMARY ON VOLO: LODGE V. KONDAUR CAPITAL CORP. (11TH CIR.)
Summarized by Michael Pugh of Thompson, O'Brien, Kemp & Nasuti PC
The Court of Appeals for the Eleventh Circuit affirmed the district court's orders granting summary judgment in favor of defendants. The circuit court held that emotional-distress damages fall within the broad term of "actual damages" in § 362(k) of the Bankruptcy Code and that in order to recover "actual" damages for emotional distress under § 362(k), a plaintiff must (1) suffer significant emotional distress, (2) clearly establish the significant emotional distress, and (3) demonstrate a causal connection between that significant emotional distress and the violation of the automatic stay. The circuit court found that plaintiffs did not establish a causal connection between their injuries and the violation of the automatic stay. The circuit court also held that the district court did not abuse its discretion in declining to take judicial notice of the contents of defendants' websites and a document from the "Georgia Press Association Public Notice Website" because plaintiffs did not supply the district court with necessary information, such as screen shots or website addresses.
There are more than 1,300 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: CAN A DEBT COLLECTOR NAME ITSELF "LAW ENFORCEMENT SYSTEMS"?
A recent blog post argues that it is an FDCPA violation for a debt collector to name itself "Law Enforcement Systems."
Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.
ABI Quick Poll
Enforcing pari passu clauses in favor of holdout bondholders by injunction against Argentina will undermine sovereign debt restructurings (NML Capital, Ltd. v. Republic of Argentina).
Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.
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