Home Insurance Is Clobbering Consumers, Yet It’s Barely Counted in Inflation​​​

Holly Meyer Lucas estimates that as many as 30 of the 100 houses her real estate team sold in and around Jupiter, Fla., last year were put on the market because their owners could no longer keep up with skyrocketing home insurance, the New York Times reported. The houses sold easily, but often to well-off cash buyers who could drop the insurance altogether because they did not have a mortgage that required them to carry it. Jumping insurance rates are acute in coastal Florida, with its exposure to big risks like hurricanes and coastal erosion, but they are also a nationwide phenomenon. Last year, premium rates for owner-occupied housing were up 11.3 percent on average nationally, based on data from S&P Global Market Intelligence. Insurance rates have been climbing for a number of reasons: Storms have become more frequent and severe, inflation and labor shortages have driven up the cost of repairs, and home values have increased, requiring larger policies. The biggest jumps occurred in Texas, Arizona and Utah, which were among 25 states in total that posted double-digit surges last year. In some places, including Florida, rates are up more than 40 percent over the past five years. That can add up to a major additional annual expense for owners: The typical single-family homeowner with a mortgage backed by Freddie Mac was paying $1,522 in 2023, up from $1,081 in 2018. And that’s simply an average. Anecdotally, many people report seeing their premiums jump by thousands of dollars. Those higher insurance rates are bringing financial pain to many homeowners, forcing people out of their homes and communities while leaving others taking big risks as they drop insurance altogether. But the rising costs are not meaningfully boosting the nation’s official inflation data, which could help to explain a small part of the disconnect between how people feel about the economy and how it looks on paper. Read more.

The Number of Americans Applying for Jobless Benefits Inches Up, but Layoffs Remain Low​​​

The number of Americans applying for unemployment benefits ticked up last week, but layoffs remain historically low in the face of lingering inflation and high interest rates, the Associated Press reported. Jobless claims for the week ending May 25 rose by 3,000 to 219,000, up from 216,000 the week before, the Labor Department reported today. The four-week average of claims, which quiets some of the week-to-week noise, also rose modestly to 222,500. That’s an increase of 2,500 from the previous week. Weekly unemployment claims are broadly interpreted as a proxy for the number of U.S. layoffs in a given week and a sign of where the job market is headed. They have remained at historically low levels since millions of jobs were lost when the COVID-19 pandemic hit the U.S. in the spring of 2020. The Federal Reserve raised its benchmark borrowing rate 11 times beginning in March of 2022 in a bid to stifle the four-decade-high inflation that took hold after the economy rebounded from the COVID-19 recession of 2020. The Fed’s intention was to cool off a red-hot labor market and slow wage growth, which can fuel inflation. Many economists had expected that the rapid rate hikes would trigger a recession, but that’s been avoided so far thanks to strong consumer demand and a sturdier-than-expected labor market. In April, U.S. employers added just 175,000 jobs, the fewest in six months and a sign that the labor market may be finally cooling off. The unemployment rate inched back up to 3.9% from 3.8% and has now remained below 4% for 27 straight months, the longest such streak since the 1960s. Read more.

U.S. Economic Growth in First Quarter Was Milder than Initial Reading​​​

Economic growth slowed more sharply early this year than initially estimated, as consumers eased up on spending amid rising prices and high interest rates, the New York Times reported. U.S. gross domestic product, adjusted for inflation, grew at a 1.3 percent annual rate in the first three months of the year, the Commerce Department said on Thursday. That was down from 3.4 percent in the final quarter of 2023 and below the 1.6 percent growth rate reported last month in the government’s preliminary first-quarter estimate. The data released on Thursday reflects more complete data than the initial estimate, released just a month after the quarter ended. The government will release another revision next month. The preliminary data fell short of forecasters’ expectations, but economists at the time were largely unconcerned, arguing that the headline G.D.P. figure was skewed by big shifts in business inventories and international trade, components that often swing wildly from one quarter to the next. Measures of underlying demand were significantly stronger. The revised data may be harder to dismiss. Consumer spending rose at a 2 percent annual rate — down from 3.3 percent in the fourth quarter, and 2.5 percent in the preliminary data for the last quarter — and measures of underlying demand were also revised down. An alternative measure of economic growth, based on income rather than spending, cooled to 1.5 percent in the first quarter, from 3.6 percent at the end of 2023. Still, the new data does little to change the bigger picture: The economy has slowed but remains fundamentally sound, buoyed by consumer spending that remains resilient even after the latest revisions. Read more.

Report: 2.2 Million Americans over 55 Still Have Student Loan Debt​​​

Millions of Americans older than 55 have yet to clear their student loan debt, according to the Federal Reserve Board’s 2022 Survey of Consumer Finances released yesterday, The Hill reported. The survey showed 2.2 million individuals above 55 have student loan debt, and an analysis from the New School’s Schwartz Center for Economic Policy Analysis shows it is impeding their retirement plans. Around 43 percent of borrowers in that age range are in middle-income brackets, according to the analysis. The average debt owed by older Americans who make less than $54,600 is around $58,000. Older Americans can still take years to finish paying their student loans, and more than 14 percent don’t even have a degree to show for their debt. “Three policies would help minimize the negative impacts of student debt on retirement savings: student loan forgiveness, income-based repayments — key components of the Saving on a Valuable Education (SAVE) plan — and preventing garnishment of Social Security benefits to repay student loans,” the analysis said. The data comes as the Biden administration has forgiven billions of dollars in student loans while seeking to make getting rid of the debt easier for the millions of Americans struggling with payments. Read more.

There’s a Program to Cancel Private Student Debt. Most Don’t Know About It​​​

More than a million borrowers who were defrauded by for-profit schools have had billions of dollars in federal student loans eliminated through a government aid program. But people with private loans have generally been excluded from any relief — until recently, the New York Times reported. Navient, a large owner of private student loan debt, has created, but not publicized, a program that allows borrowers to apply to have their loans forgiven. Navient, based in Wilmington, Del., has not publicized the discharge program. Other borrowers have complained on social media about difficulties getting an application form. When asked about the program and the criticisms, a company spokesman said, “Borrowers may contact us at any time, and our advocates can assist.” So a nonprofit group of lawyers has stepped in to ease the process: The Project on Predatory Student Lending, an advocacy group in Boston, just published Navient’s application form and an instruction guide for borrowers with private loans who are seeking relief on the grounds that their school lied to them. Sen. Elizabeth Warren (D-Mass.) and eight Senate colleagues sent Navient a letter last month with a lengthy list of questions about the program. Navient responded, but did not directly address many of the senators’ questions. Navient’s new program — which it calls a “school misconduct discharge” — is something of a private parallel to a federal program known as “borrower defense to repayment,” which allows those who were seriously misled by their schools to have their federal student loans eliminated. Under President Biden, the Education Department revived the relief program and used it to cancel nearly $30 billion in debt owed by 1.6 million borrowers. The Project on Student Predatory Lending backed a class-action lawsuit against the government that led to a 2022 settlement under which nearly 200,000 borrowers had their federal student debts eliminated. Read more.

The Rise in Consumers’ Late Debt Payments Is Slowing Down​​​

The drip of consumer lending data continues to paint a fairly consistent picture: The rising delinquency trend for debts such as auto, card and home loans seems to be slowing down, the Wall Street Journal reported. Delinquencies, or loan payments that are at least 30 days past due, really started to climb in 2023, and in some categories moved above where they were just before the COVID-19 pandemic. That fueled concern that the U.S. economy could soon hit the skids, with consumers finally spending through the cushions they had built up during the pandemic. Right now, though, those delinquencies are steadily falling. The latest monthly data from CreditGauge showed the percentage of overall outstanding balances of consumer debt — encompassing auto, card, home and personal loans — that was 30 to 59 days past due fell to 0.86% in April, down from the recent peak of 1.04% in February. Some of that decline is seasonally typical for this time of year, in part driven by people using tax refunds to pay off some debt. The April rate was still higher than a year prior, which was 0.74%. But the year-over-year jump was smaller than last year’s at the same time. And February’s level was below the February 2020 mark of 1.07%. The trend was fairly consistent across card, home and auto loans. There was a split, however, between year-over-year trends for people at different credit tiers. Consumers with subprime credit (or scores 300 to 600), had an overall 30-to-59-days delinquency rate of 10.37% in April, up from 10.01% a year prior — though the rise was far smaller than the nearly two-percentage-point year-over-year jump in April 2023. Those with so-called near-prime scores (or 601 to 660) also had elevated late-payment rates over the past year. By contrast, people with higher scores were slightly less late on payments in April than they were a year ago. Read more.

Patricia Redmond Elected as President of the American College of Bankruptcy​​​

<b>Patricia “Trish” Redmond</b>, director of the Bankruptcy Assistance Clinic and a past ABI President, was elected president of the American College of Bankruptcy, according to a University of Miami School of Law press release. Redmond was inducted as a class fellow in 2003. She served on the Board of Regents for the Eleventh Circuit, the board responsible for the nomination and selection of qualified candidates to fellowship in the College, for four years, including as its chair in 2022. She was the first woman in the College’s history to hold this position. She also served as chair of the College’s Distinguished Law Student Committee and as a member of the College’s Foundation Board of Directors from 2005-2011, including as Secretary for a three-year term. As a Business Restructuring shareholder at Stearns, Weaver, Miller, Weissler, Alhadeff & Sitterson, P.A.in Miami, Redmond practices insolvency and restructuring. Read more.

Pick Up Your Copy of Driving the Recovery Bus​​​

Make sure to pick up your copy of Driving the Recovery Bus: Augmenting Creditor Recoveries Through Claims Brought by a Litigation Trustee, written by Gordon Z. Novod. The book is not only for litigation trustees, but also for creditors who serve on official committees of unsecured creditors, attorneys and other professionals who frequently represent official committees of unsecured creditors, and others with a general interest in pursuit of causes of action by litigation trustees. Get your copy of Driving the Recovery Bus.

Application and Nomination Period for ABI’s 2024 “40 Under 40” Class Open Through June 30 ​​​

The ABI "40 Under 40" annual program continues to highlight the best up-and-comers in the industry. If you are, or know of, a dynamic insolvency professional who is committed to growth and excellence both professionally and in your community, this is one opportunity not to be missed! Nominations and applications are due June 30. Click here for more information and to submit a nomination or application. 

Get Your Copy of The Purdue Papers to access Amicus Briefs and Commentaries Related to Purdue Pharma Case!​​​

A petition by the U.S. Trustee regarding the case of Purdue Pharma L.P. is currently being considered by the U.S. Supreme Court. Regardless of how the Court rules, the case has already generated a mountain of commentary in the form of amicus briefs, petitions and other related background material. ABI, guided by editor David R. Kuney (who represented one group of amicus filers), has gathered together all of this material in a fully searchable form — more than 3,000 pages worth! This collection will be updated with the final Supreme Court decision — expected later in 2024 — as well as a final commentary by ABI Editor-at-Large Bill Rochelle, who writes Rochelle’s Daily Wire. This collection is an invaluable resource for anyone working in the area of third-party releases, either as a practitioner, an academic or just an interested party. Get your digital copy for only $25!

Have an Idea for a Topic for an ABI Conference Session? Submit Your Proposal via ABI’s “Call for Abstracts” Page!​​​

ABI has launched an online portal for professionals to submit proposals for educational sessions at future ABI conferences. Submitters can describe their proposed topic, outline the session’s focus and learning goals, suggest speakers, and provide contact information via the portal’s detailed form. The portal can be accessed here.

All submissions will be reviewed by an internal Education Committee, which will contact the submitter to ask questions as needed and to discuss the status of the proposal. Submissions will be reviewed on a rolling basis.

Sign up Today to Receive Rochelle’s Daily Wire by E-mail!
Have you signed up for Rochelle’s Daily Wire in the ABI Newsroom? Receive Bill Rochelle’s exclusive perspectives and analyses of important case decisions via e-mail!

Tap into Rochelle’s Daily Wire via the ABI Newsroom and 'X' (Formerly known as Twitter)!