New York Fed Report Finds Early Delinquency Rates Rose for Low-Income Borrowers​​​

The Federal Reserve Bank of New York today released “The State of Low-Income America: Credit Access & Housing,” a report examining debt holdings across income groups. As part of a series, this report offers insights into low-income households’ finances by examining their ability to obtain access to and maintain credit, and highlights rental burdens and the muted refinance boom in lower-income areas. The 2024 report finds that early delinquencies on auto and credit card products began rising for low-income borrowers in 2022 through Q3 2023, exceeding pre-pandemic levels. It also reveals that homeowners in low-income neighborhoods were less likely than homeowners in wealthier neighborhoods to refinance their mortgages when interest rates were low in 2020 and 2021. Among the report’s key findings:

• Only 24% of mortgages in low-income areas were refinanced between 2020 and 2021, compared to 42% of mortgages in high-income areas.

• Only 59% of people in low-income neighborhoods have credit cards. Median credit card balances are now higher for all groups than they were before the pandemic.

• In low-income areas, 57% of households are rent-burdened, compared to 44% of households in high-income areas. Households are defined as “rent burdened” if they pay more than 30% of their monthly income on rent.

• Student loan delinquencies remain low due to the repayment moratorium. When payments resume, many borrowers may benefit from expanded income-driven repayment programs, but uncertainty regarding the availability and roll-out of the programs remains. Past-due student loan payments will not be reported on credit reports until the end of 2024.

Click here to read the full report.
 

Commentary: Why Is Paying for College So Complicated?*​​​

Saving and paying for college is an endurance test, a forced march on an often 50-year parade, where strange numerical codes and senseless jumbles of letters mark a route that Waze can’t map, according to a New York Times commentary. Begin at age zero or earlier with a 529 college savings plan for your child, born or not yet so. As kids hit the teen years, consult colleges’ net price calculators (N.P.C.) to see how much financial aid they might get. Then, fill out the FAFSA, which stands for “Free Application for Federal Student Aid,” and determine your student aid index (S.A.I.). The primary FAFSA output used to be known as the E.F.C., or “Expected Family Contribution,” but a recent legislative effort aimed at “simplification” replaced one acronym with another. Admitted to a great school? Good, but the grant money it offers based on that S.A.I. or other data or the figures that another form, the CSS Profile, belches out is probably not enough to make college affordable, according to the commentary. So you could apply for a federal PLUS loan for parents, which might take you 25 years to repay. As the acronyms pile up, parents may feel the urge to back up and ask why it has to be so complicated. The complexity comes from countless numbers of well-meaning people — inside government and out — who have made incremental improvements over decades to increase access to higher education, according to the commentary. Because a college degree can add plenty to a person’s lifetime earnings and wealth if they finish their degree and haven’t taken on too much debt, it’s good public policy to try to make it more affordable for more people. But as income inequality increases and college costs rise, each new collection of freshmen requires ever more help. Read more.

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.  
 

ABI's Latest "Party in Interest" Podcast Features DLA Piper's Rachel Albanese!​​​

ABI Executive Director Amy Quackenboss talks with Rachel Albanese, co-chair of DLA Piper's U.S. Restructuring practice and a partner in the firm’s New York office. In addition to her more than 20 years of restructuring experience that has included a wide range of chapter 11 cases, cross-border insolvencies and Puerto Rico's restructuring efforts, she is integral to a number of ABI initiatives, including ABI's Task Force on Veterans and Servicemembers Affairs. Listen to the podcast to find out more about the efforts that are important to Rachel and those that inspired her for all these important endeavors. 
 

U.S. Bank Regulator: New Liquidity Rules Needed to Handle Bank Runs​​​

Michael Hsu, the acting U.S. Comptroller of the Currency, today called for new liquidity rules to help lenders respond to runs by depositors of the kind that felled Silicon Valley Bank and other mid-size banks last year, Reuters reported. Hsu's remarks were the latest sign that regulators are continuing to tinker with the rule book after a spate of bank failures in the spring of 2023. "I believe a new targeted regulatory requirement for mid-size and large banks to have sufficient liquidity to cover stress outflows over a five-day period warrants serious consideration," Hsu said, according to a copy of prepared remarks. Hsu also addressed the need for banks to be ready to use the U.S. Federal Reserve's so-called discount window, which many have avoided for fear of signaling weakness to markets and because of the need to offer eligible collateral. Hsu said that banks could receive credit for prepositioning such collateral at the discount window to make borrowing easier during stress periods. "The rule should also clarify operational preparedness expectations related to the discount window, perhaps even including a requirement to do periodic test draws," Hsu said. Read more. 
 

Unemployment Claims Fall to Lowest Level Since September 2022​​​

The number of Americans applying for unemployment benefits last week fell to its lowest level in more than a year, underscoring the resilience of the labor market despite elevated interest rates that are intended to cool the economy, the Associated Press reported. Jobless claim applications fell to 187,000 for the week ending Jan. 13, a decrease of 16,000 from the previous week, the Labor Department reported today. That's the fewest since September of 2022. The four-week average of claims, a less volatile reading, fell by 4,750 to 203,250. That's the lowest four-week average in almost a year. Overall, 1.81 million Americans were collecting jobless benefits during the week that ended Jan. 6, a decline of 26,000 from the previous week. Read more. 
 

Single-Family Housing Starts Plunge in December​​​

U.S. single-family homebuilding dropped sharply in December after a string of strong gains, but new construction remains underpinned by a shortage of previously owned houses for sale, Reuters reported. Single-family housing starts, which account for the bulk of homebuilding, fell 8.6% to a seasonally adjusted annual rate of 1.027 million units last month, the Commerce Department's Census Bureau said on Thursday. Data for November was revised lower to show single-family starts rising to a rate of 1.124 million units instead of the previously reported 1.143 million units. Rainy weather last month likely contributed to the plunge in homebuilding. Single-family starts increased 15.8% on a year-on-year basis in December. Single-family homebuilding fell in the Northeast, Midwest and the densely populated South, but rose in the West. A survey from the National Association of Home Builders on Wednesday showed that confidence among single-family home builders improved sharply in January. That occurred as the rate on the popular 30-year fixed mortgage retreated further to around 6.66% after peaking at a 23-year high of 7.79% in late October, according to data from mortgage finance agency Freddie Mac. Read more. 
 

Don't Miss an Examination of Chapter 13 Plan Issues During a Special Webinar Next Tuesday!

ABI is collaborating with NCBJ for a special webinar on Jan. 23 at 1 p.m. ET titled, "Behind the Bench: Chapter 13 Plan Issues – The Good, the Bad, and the Ugly." Register here for FREE!

Volunteer Today to Become a Preliminary-Round Judge or Brief Grader for the Duberstein National Bankruptcy Moot Court Competition!

The Duberstein National Bankruptcy Moot Court Competition, now in its 32nd year and widely recognized as one of the nation’s preeminent moot court competitions, will be held in New York on March 2-4, 2024. Fifty-three teams from law schools across the country will compete through written briefing and oral argument. Please find the fact pattern by clicking here. 

Volunteers are needed for brief graders (please sign up by Feb. 9) and judges for the preliminary rounds (please sign up by Feb. 10) of the Competition. Click here for more information and to volunteer!

Asset Sale of the Year Award Application Now Available!

ABI’s Asset Sales Committee is seeking nominations for its Annual ABI Asset Sale of the Year award. Any bankruptcy sale that closed between January 1 and December 31, 2023, and involved at least one professional who is a member of ABI’s Asset Sales Committee is eligible. Nominations are due February 16; please send your nominations to Matt LoCascio and Leyza Blanco. For more information, please click here.

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, who 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, although please note that abstracts to be considered for the upcoming Annual Spring Meeting, being held April 18-20, 2024, at the Marriott Marquis in Washington, D.C., were due on December 31, 2023. 

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)!