Business taxes rising just as US economy heads into choppy water

Corporate tax hikes poised to take effect this year, dinging American businesses

A number of business taxes are rising just as the U.S. economy faces the increased risk of a recession, threatening to prolong financial pain for many companies and consumers.

Beginning this year, businesses will face a steeper federal tax burden thanks to several major changes included in the health care and climate change spending bill that Democrats passed over the summer. On top of that, key provisions of the 2017 Republican tax overhaul are set to phase out this year.

Combined, the tax increases are projected to cost businesses about $115 billion this year – a big increase from years' past, according to the Joint Committee on Taxation.

Read more at FOX BUSINESS

CFPB releases updates to mortgage servicing exam procedures: CFPB

Today, the Consumer Financial Protection Bureau (CFPB) is releasing our updated Mortgage Servicing Examination Procedures, providing transparency to stakeholders about how we do our work. The Examination Procedures describe the types of information that CFPB examiners gather to evaluate mortgage servicers’ policies and procedures; assess whether servicers are complying with applicable laws; and identify risks to consumers related to mortgage servicing. The updated Examination Procedures include CFPB guidance released since the last update in June 2016.

The updates cover forbearances and other tools that mortgage servicers have used during the COVID-19 national emergency. Those tools include streamlined loss mitigation options that satisfy the temporary flexibilities in the CFPB’s mortgage servicing rules established by the COVID-19 related amendments. We understand these streamlined options have been very successful in keeping consumers in their homes, and note that COVID-19 will continue to impact families, even beyond the national emergency.

Read more at Consumer Financial Protection Bureau (CFPB) 

Six of The Eight Largest Banks Now Offer Affordable Small Loans: PEW

The consumer-friendly moves provide savings to customers over costly lenders

Just five years ago, no large banks offered small installment loans or lines of credit to checking account customers with low or no credit scores but today thanks in part to changes in federal regulations to help consumers, six of the eight largest banks, measured by their number of branches, do. These loans are safer and more affordable for customers who previously would turn to high-cost payday loans or other alternative financial services, such as auto-title loans and rent-to-own agreements.

Regions Bank, Truist, and Wells Fargo began offering these consumer-friendly loans in late 2022, joining Bank of America, Huntington Bank, and U.S. Bank. These six large banks combined operate nearly 17,000 branches, or 23% of all bank branches in the U.S.

They are offering loans in amounts up to $500, $750, or $1,000 depending on the bank, which are large enough for customers to replace high-cost non-bank loans with affordable credit. Borrowers can access the funds in a few minutes or less, because they are automatically pre-approved or complete a quick application and the proceeds are disbursed into their bank account almost instantly.

Read more at The Pew Charitable Trusts

Student Loan Borrowers With Certain Demographic Characteristics More Likely to Experience Default: PEW

Survey data shows differences by race, gender, age, disability, and marital status

Over the past two decades, student loan borrowers falling into certain demographic groups have been more likely than others to experience default, according to a survey done for The Pew Charitable Trusts. Those groups include Black and Hispanic borrowers, older borrowers, female borrowers, and borrowers who reported having a disability or being widowed, divorced, or separated.

Problems with repayment are widespread. About a third of federal student loan borrowers in the survey reported experiencing default at some point over that time period. And among those who defaulted, nearly two-thirds experienced default more than once.

Since March 2020, the federal student loan payment and interest pause put in place in response to the COVID-19 pandemic has prevented more borrowers from entering default. But that pause is set to expire Dec. 31, and the Department of Education has announced a program to help those in default get back on track.

Read more at The Pew Charitable Trusts

IRS adds extra resources to help process returns and deliver tax refunds faster

The Treasury Department on Monday unveiled several new efforts at the Internal Revenue Service to help taxpayers file their returns and get their refunds quicker this season.

The IRS added more customer service representatives, is providing more online tools, and is modernizing how it processes paper returns, U.S. Deputy Secretary of the Treasury Wally Adeyemo said in a press briefing.

The improvements, which are funded by the Inflation Reduction Act signed in August, should bolster return-processing time and get refunds out faster for some taxpayers. The upgrades also come after the IRS struggled with employee shortages and a backlog of millions of unprocessed returns in recent years.

Read more at YAHOO FINANCE

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Credit score transitions during the COVID-19 pandemic: CFPB

Many households found that their financial fortunes changed during the pandemic, and these changes were often reflected in their credit scores. A recent CFPB analysis found that the distribution of credit scores shifted upward during the pandemic, suggesting that pandemic-era mortgage forbearances, the federal student loan repayment pauses, and federal cash transfers that improved some consumers’ financial wellbeing drove the overall increases in credit scores. 1 In this blog, we analyze increases in scores by looking at credit score tiers, labeling consumer credit scores as deep subprime, subprime, near-prime, prime, or superprime. These tiers are important to study because many lenders use them to make loan decisions and set the terms of credit. A higher credit score tier can allow a consumer access to more and cheaper credit, holding all else equal. We found that the deep subprime and subprime tiers experienced the biggest upward shift, though individuals in higher credit score tiers were also more likely to move up at least one tier than they were before the pandemic. Forty-three percent of consumers with subprime credit scores moved up at least one tier during the pandemic, whereas in the ten years prior to the pandemic, only 37 percent moved up at least one tier.

We used data available to the CFPB to examine the transitions of consumers across credit score tiers using a commercially available credit score. The data are quarterly snapshots from June 2010 through June 2022 of the Consumer Credit Panel (CCP).

Read more at CFPB

Emergency savings program fuels employees’ financial security and well-being

Beginning this month, eligible employees can earn up to $1,000 from Delta to fuel their emergency savings when they complete a financial education/coaching program and contribute to an emergency savings account. This new program, created in partnership with financial advisory organization Operation HOPE and workplace provider Fidelity Investments, aims to help Delta employees strengthen their financial well-being by addressing a common challenge seen nationwide. 

“At Delta, we know that physical, emotional, social and financial health are essential for our people to be at their best,” said Delta CEO Ed Bastian. “This investment in the financial well-being of our employees is a practical solution to a common challenge. With stronger financial literacy and the peace of mind of a safety net, our team can worry less and focus on the goals that matter most to them.” 

Read more at Delta News Hub

CFPB Takes Action to Halt Debt Collection Mill From Bombarding Consumers with Junk Lawsuits: Consumer Financial Protection Bureau

Forster & Garbus illegally sued borrowers on behalf of Citibank and Discover, among others

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) has reached a settlement in its lawsuit against law firm Forster & Garbus, LLP for illegal debt-collection practices. If approved by the court, the proposed settlement would prohibit Forster & Garbus from filing any new lawsuit against a consumer unless it has specific documents supporting the debt and certifies that an attorney reviewed those documents. The order would also require the company to dismiss any pending lawsuit where it cannot satisfy these requirements. Forster & Garbus would also be required to pay a penalty of $100,000, which would be deposited into the CFPB’s victims relief fund.

“Forster & Garbus bombarded its customers with sketchy lawsuits on behalf of big lenders like Discover and Citibank,” said CFPB Director Rohit Chopra. “The CFPB will be scrutinizing large financial companies that enlist debt collection outfits operating lawsuit mills.”

Read more at Consumer Financial Protection Bureau