Capital One Financial Corp. said it will stop charging customers overdraft fees, making it one of the largest banks to do so, the Wall Street Journal reported. The fees, which are charged when customers don’t have enough money in their accounts to cover payments, are a source of income — and criticism — for banks. For years, politicians and consumer advocates have said the fees disproportionately affect Black families and those with low and moderate incomes. A report released in June by Financial Health Network, a research firm, found that Black households and those with low-to-moderate incomes were almost twice as likely to incur overdraft fees as white households or those with higher incomes. Online bank Ally Financial Inc. eliminated its overdraft fees in June, saying that they hurt people living paycheck to paycheck. Some other banks have introduced products and features that are more lenient on overdrafts.
Fannie Mae and Freddie Mac shares climbed after their regulator announced that the mortgage giants will be able to back loans worth nearly $1 million in some of the most expensive U.S. housing markets, Bloomberg News reported. Reflecting the surge in home prices during the COVID-19 pandemic, Fannie and Freddie will be able to buy loans of $970,800 in areas including San Francisco, Los Angeles and New York, the Federal Housing Finance Agency announced Tuesday. The increased loan limits apply to single-family residences. Shares of Fannie and Freddie both rose about 14% to 99 cents and $1, respectively, in New York trading as of 2:15 p.m. Fannie and Freddie don’t make mortgages. They buy them from lenders, wrap them into securities and guarantee repayment of principal and interest to investors. The federal government took control of the companies during the 2008 financial crisis and bailed them out as mortgage defaults mounted. In other parts of the country, loan limits will increase to $647,200 next year from $548,250 in 2021, the FHFA said. The changes are aimed at making it more affordable for Americans to purchase homes. The pandemic has sparked fierce competition for properties as Americans sought more space to live and work. Record low mortgage rates have also fueled the real-estate frenzy. More owners are expected to list their properties for sale in the coming months, which would help ease the inventory shortage. But demand remains intense. A measure of home prices in 20 U.S. cities jumped 19.1% in September, the S&P CoreLogic Case-Shiller index showed Tuesday. Nationwide, prices climbed 19.5%, the data show.
Americans are applying for credit cards at a rate not seen since before the pandemic. Close to 27% of U.S. consumers said in October that they had applied for a credit card in the past 12 months, according to the Federal Reserve Bank of New York, the Wall Street Journal reported. That is the highest level since 2019 and well above the record low of 16% recorded a year ago. The New York Fed data doesn’t account for the new Omicron coronavirus variant, which could set back people’s travel plans and further snarl supply chains. But the rebound in credit-card appetite through the beginning of autumn suggests consumers could continue to drive the U.S. economic recovery. “Many things are slowly returning to more normal times,” said Wilbert van der Klaauw, senior vice president at the New York Fed. “With that, you expect the demand for credit to come back to pre-pandemic levels and continue on the same growth path.” Demand for credit cards and other loans fell during the early months of the pandemic. Americans uncertain about their finances worried about taking on new debt. Restrictions on dining and travel meant that people didn’t have many places to spend money anyway. Things started to change earlier this year after COVID-19 vaccines boosted the U.S. economy. More Americans, after a year of hunkering down, started signing up for new credit cards.
The Treasury Department is redirecting rental-assistance money from some states and localities that haven’t used the bulk of their funds to others facing backlogs of aid requests, according to administration officials, the Wall Street Journal reported. The officials said they couldn’t specify which jurisdictions would lose and gain funds. But they said those with large amounts of unused funds include rural states — like Montana and North Dakota — while local officials in several more populous states — like New York and Texas — are expected to exhaust their rental-assistance money over the coming week and months. Officials said an initial reallocation, set to be unveiled in early December, could exceed $800 million and come at the request of states and localities that acknowledge they have more money than they can spend. Much of that money may be moved within states, rather than from one state to another — for instance, from a state-run program to a city-run program, or vice versa. By the end of the year, the administration expects as much as $20 billion of the $47 billion in rental-assistance funding Congress authorized to be spent. An additional $5 billion to $10 billion will be committed to a specific tenant or landlord but not yet distributed.
Out of $140 billion in past-due medical bills reported on U.S. credit files, much of it disproportionately falls on Black Americans, Bloomberg News reported. Census data show that 28% of Black households have medical debt, compared with 17% of White households. The gap is even wider in certain parts of the country. In St. Louis County, where Walker lives, people living in communities of color are almost four times as likely to have medical debt in collections than people living in predominantly White communities, according to data compiled by the Urban Institute. Hospitals have performed heroic work to save lives amid the immense challenges of the Covid-19 pandemic. Through it all, many institutions continued to pursue collection of medical debt. After George Floyd’s murder last year and the protests that followed, hospital groups and medical societies pledged to advance racial equity. The American Hospital Association called for “the hard but necessary work to make fundamental changes and address our society’s inequity,” and “real solutions that make a genuine difference.” Health-care companies can’t fix the root causes of the country’s systemic inequality, but doctors and hospitals can ensure their services don’t inflict financial harm on patients. For instance, they can determine how to screen patients for financial assistance and how to respond when a bill goes unpaid. But patient advocates say the medical industry perpetuates such harsh billing practices as garnishing wages, charging high interest rates, placing liens on homes, and suing patients. Those tactics often land harder on communities of color. Meanwhile, these aggressive billing practices bring in little revenue for hospitals—less than 1% of the total by some estimates, patient advocates say. “These are already people who’ve been struggling to pay,” says Jenifer Bosco, a staff attorney at the National Consumer Law Center who co-wrote proposed legislation to strengthen protections for patients. “It’s not the way the hospitals are balancing their budgets.”
More than 30,000 borrowers are receiving an estimated $2 billion in debt relief in this initial round, according to the Education Department, the Washington Post reported. Of that group, at least 10,000 have already had their balanced canceled, while the remainder will have a clean slate in the coming weeks. In October, the department said it would temporarily allow all payments that eligible borrowers made on federal student loans to count toward the forgiveness program. The decision allows participants to sidestep the program’s rigid rules to receive debt relief, but only until Oct. 31, 2022. The department said 965,000 borrowers who are working toward forgiveness will see an increase in their payment count. That’s about 75 percent of the people who have indicated their interest in the program by submitting an employment verification form.
