Monthly payments on loans given out in June to buy a new car averaged an all-time high of $686, according to car-shopping site Edmunds, whose data go back to 2005. That is up 4% from January and 13% above a year ago, the Wall Street Journal reported. A growing share of people are paying much more. A record 12.7% of new-car buyers who signed up for a loan in June have a monthly payment of at least $1,000, according to Edmunds. That share is up from roughly 7% a year earlier, 5% in June 2019 and 2% in June 2010. Average monthly payments on used cars are near a record, according to Edmunds, whose data on used cars go back to 2008. In June, they averaged $554, up 12% from a year ago. (Subscription required.)
A federal appeals court ruled that lenders can’t foreclose on homes when people named in the foreclosure proceedings file for personal bankruptcy, even when they don’t directly own the property at issue, WSJ Pro Bankruptcy reported. The U.S. Second Circuit Court of Appeals said Wednesday that lender Bayview Loan Servicing LLC improperly foreclosed on the primary residence of Eileen Fogarty shortly after she filed for bankruptcy protection in 2018. Ms. Fogarty’s bankruptcy filing triggered an automatic stay on collection efforts by her creditors. Bayview violated the stay when it sold her home at a foreclosure auction days later, the three-judge panel ruled Wednesday, while remanding her case to bankruptcy court to determine sanctions against the lender. Ms. Fogarty had lived in the house in Shirley, N.Y., owned by 72 Grandview LLC, a limited liability company in which she held a 99% interest. The company in 2010 stopped making payments on a mortgage loan backed by the property, and the lender moved to foreclose the following year, naming both the company and Ms. Fogarty as defendants in the foreclosure lawsuit. After Ms. Fogarty filed for bankruptcy, Bayview took the position that it could proceed because the property’s owner was the LLC, which wasn’t in bankruptcy. The U.S. Bankruptcy Court in Central Islip, N.Y., sided with the lender and rejected Ms. Fogarty’s request for sanctions as punishment for selling the home despite her personal filing. A federal district judge reversed, ruling in her favor. Bayview then appealed to the Second Circuit. “[W]e conclude that Bayview willfully violated the automatic stay when it completed the sale while knowing that Fogarty, a named party in the foreclosure action, had filed a bankruptcy petition,” the appeals court said, noting an “error of law” at the bankruptcy-court level.
Help is coming for many people with medical debt on their credit reports. Starting today, the three major U.S. credit reporting companies will stop counting paid medical debt on the reports that banks, potential landlords and others use to judge creditworthiness, the Associated Press reported. The companies also will start giving people a year to resolve delinquent medical debt that has been sent to collections before reporting it — up from six months previously. Next year, the companies also will stop counting unpaid medical debt under at least $500. The companies say these moves will wipe out nearly 70% of the medical debt listed on consumer credit reports. Patient advocates call that a huge advance. But they question whether medical debt should be on credit reports at all, given that many see it as a poor indicator of whether someone is trustworthy for a loan or rent. The federal Consumer Financial Protection Bureau has said its research shows mortgages and credit cards are better predictors than medical bills of whether someone will repay a debt. The agency, which monitors banks, lenders and other financial institutions, has noted that people often don’t have time to shop for the best price when they seek care and may have little control over the progress of a serious illness. Medical billing errors can wind up on credit reports. And patients are sometimes unsure about what they owe or whether an insurer will eventually pay it. The agency said earlier this year it estimates that 58% of the debt in collections and on credit records is from medical bills, and past-due medical debt is more prevalent among Black and Hispanic people.
For soldiers sometimes still in their teens, the dozens of financial services operators that surround Fort Campbell (Kentucky) and other military outposts are a gantlet to run every time they step off government property, the New York Times reported. The results are alarming: The post’s own newspaper reported that in recent years, 40 percent of its soldiers had at least one predatory loan. Often, they owe the loans to business owners who were once in the military themselves. The Department of Defense, regulators and elected officials are well aware of the perils. Financially troubled soldiers may not be at their best, and money problems can cost them security clearances that are crucial to their jobs. So for decades, the government has fought to fend off cheaters, charlatans and others who wish to get their claws into military paychecks. Watchdogs are deeply concerned. This month, the Consumer Financial Protection Bureau issued a warning about so-called allotments, a system that allows lenders to siphon money directly from soldiers’ paychecks. It also published a report noting that service member complaints rose 19 percent from 2019 to 2021, the majority of them related to debt collection and the credit reporting that tracks those debts. With prices rising for almost everything, including cars and food and gas, the opportunities for lenders to profit from military personnel have only grown. And such customers are becoming even more enticing as branches of the armed forces increase sign-up bonuses to better attract recruits. Attempts to address the problem run into one unavoidable obstacle: Young and financially inexperienced members of the military are ideal clients. They are not highly paid, but their jobs are all but guaranteed — so their paychecks arrive like clockwork.
The Education Department has approved $8.1 billion in student loan debt cancellation for nearly 1,450,000 borrowers in the nine months since the Biden administration overhauled the failed public service loan forgiveness program, U.S. News and World Report reported. The new figures mark significant progress the department has made since announcing major changes to the program in October 2021 — one of the several actions taken by Education Secretary Miguel Cardona aimed at canceling student loan debt for certain borrowers trapped in dysfunctional repayment plans due to misguided technical rules and mismanagement by loan servicers or for borrowers defrauded by for-profit school colleges. The public service loan forgiveness program — a promise made by the government in 2008 to provide debt relief to teachers, nurses, firefighters and others who go into public service jobs – had been mired by complicated eligibility rules and servicing errors that made it nearly impossible to benefit from. The rules surrounding how a borrower can qualify and count payments toward the program were so onerous that only 16,000 borrowers have ever received forgiveness under the plan since it was first offered in 2008, according to the Education Department. A 2019 report from the Government Accountability Office found that only 1.3% of applicants were approved for loan forgiveness. As a result, the Education Department instituted a set of policy changes last year that, among many other things, allowed borrowers to count prior payments they made as going toward payments made under the public service loan forgiveness program — regardless of what type of loan program they have or consolidated previous loans into — as long as they worked for a qualified employer. The changes also simplified what it meant for a payment to qualify for public service loan forgiveness, addressing one of the most pressing concerns voiced in the 48,000 comments received on the issue: that too many payments do not count toward the forgiveness program due to technical requirements like the timing and amount of payments made. In some instances, department officials said, borrowers missed out on credit toward public service loan forgiveness because their payments were off by a penny or two or were late by only a few days. Department officials estimated that the new changes would help more than 550,000 borrowers who have previously consolidated their loans, including 22,000 borrowers who will be immediately eligible to have $1.74 billion in federal student loans discharged and another 27,000 borrowers who could potentially qualify for $2.82 billion in forgiveness if they certify periods of their employment.
The University of Michigan’s gauge of consumer sentiment fell sharply to a record-low reading of 50.2, down from a May reading of 58.4, MarketWatch.com reported. The level is comparable to the low point reached in the middle of the 1980 recession, the university said. Americans’ expectations for overall inflation over the next year rose to 5.4% in June from 3.3% in May, while expectations for inflation over the next five years jumped to 3.3% from 3% in the prior month. That’s the highest level since 2008, according to Kathy Jones, a strategist at Charles Schwab.
Around 200,000 former students who attended schools that they said had defrauded them will have $6 billion in federal loans canceled under a sweeping settlement announced on Wednesday, the latest move by the Biden administration to address the student loan crisis by eliminating some debts, the New York Times reported. Those who applied for relief — some as long as seven years ago — will have their loans wiped out if they attended one of more than 150 schools named in the class-action settlement, nearly all of which are for-profit colleges and vocational programs. The deal reverses 128,000 denial notices — which a federal judge called “disturbingly Kafkaesque” — that were sent to relief applicants during the Trump administration. Many of the schools included in the settlement are out of business. They include large chains like the Art Institutes and other campuses run by the Dream Center, whose operations abruptly collapsed in 2019, and those owned by Career Education. The latter, at its peak, enrolled tens of thousands of students at more than 100 locations. The deal also includes a few colleges that are still operating, including the University of Phoenix, Grand Canyon University and DeVry University.
