In a recent lawsuit against a Kansas car dealership, an independent arbitrator found the dealership to be liable for more than $14.8 million in damages for customers whose information was falsified on their credit applications. For these customers, this resulted in higher loan payments and increased financial stress. In a report from Missouri Lawyers Media, the lead attorney for the 31 claimants, Ken McClain, said that the dealership was falsifying the information on the applicants’ credit applications. Information like income and job titles were inflated to ensure the applicants would qualify for larger loans, likely loan amounts that these customers would have trouble making repayments on. For example, McClain described that one claimant who works as a front desk clerk at a hotel was described as a ‘front end logistics specialist’ on the credit application submitted for her. With this falsified information, customers were receiving larger loans, which the dealership…
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Banks continue to see an increase in delinquencies on commercial real estate (CRE) loans as interest rates continue to rise and work-from-home policies create empty workspaces. As demand for office space decreases, borrowers have begun to default on their loans, forcing banks and lenders to sell their loans at significantly lower rates or engage in other potentially costly and time-consuming workouts. In reports for the third quarter of 2023, many banks show significant losses, largely due to CRE loans. Morgan Stanley reported setting aside $134 million for credit losses, stating that this was primarily due to “deteriorating conditions in the commercial real estate sector,” according to an article from Yahoo!, Other institutions, like Bank of America, have reported that their loans increased as well. Bank of America’s nonperforming loans increased to nearly $5 billion in the third quarter from $4.27 billion in the second quarter. They attributed this increase to…
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Small business bankruptcy filings are increasing, likely a result of the Federal Reserve’s increased interest rates as well as higher operating costs and stricter lending standards. Small-business owners received a decent amount of help during the pandemic through various government programs. However, as many of these programs come to an end, small businesses are feeling the impact in a big way. In a more challenging time to navigate these circumstances, small businesses, by their general nature, operate on thinner profit margins and smaller cash reserves than do larger corporations. According to a report from the Wall Street Journal, this has led many small businesses to file for bankruptcy under Subchapter V, a newer provision in federal bankruptcy code that makes it easier for financially struggling businesses to restructure. Put into effect in February 2020, Congress created Subchapter V, as standard Chapter 11 bankruptcy filings were far more expensive and restrictive…
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