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Lawsuit Takes Aim At Fintech’s Handling Of PPP Loan Forgiveness Applications

No Port in a Storm: Ensuring DIP Loans Do Not Inadvertently Cross the Criminal Interest Threshold


A recent lawsuit seeks to hold a fintech company liable for failing to adequately service loans made as part of the Paycheck Protection Program (PPP), marking what may be the first putative class action lawsuit challenging the manner in which PPP lenders process loan forgiveness applications.

The suit, filed in late March 2022, alleges that Kabbage failed to appropriately process borrowers’ PPP loan forgiveness applications. See Carr v. Kabbage, Inc., Case No. 1:22-cv-01249 (ND Ga.). The PPP permitted borrowers to have their loans forgiven if they were able to meet certain criteria. The complaint alleges that Kabbage issued billions of dollars in PPP loans, but made it difficult or impossible for borrowers to submit loan forgiveness applications. It contends that Kabbage failed to process applications within the time required by federal regulations, asked customers to sign altered forms, and demanded that customers provide unnecessary documents.

The complaint faults Kabbage for other conduct that it says made it more difficult for borrowers to have loans forgiven. It claims that Kabbage services PPP loans through a separate, understaffed entity. He argues that Kabbage should have participated in the Small Business Administration’s loan forgiveness portal. And it alleges that Kabbage has wrongfully attempted to collect on loans that should have been forgiven.

The suit seeks to certify a nationwide class of Kabbage borrowers, along with five state sub-classes. Notably, it seeks to disgorge from Kabbage all of its origination fees from PPP loans.

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Congress needs to keep student loan debt in the conversation


OPINION AND COMMENTARY

Editorials and other Opinion content offer perspectives on issues important to our community and are independent from the work of our newsroom reporters.

Deborah Ross speaks outside the North Carolina Democratic Party headquarters in Raleigh, NC, Tuesday, Nov. 3, 2020.

Deborah Ross speaks outside the North Carolina Democratic Party headquarters in Raleigh, NC, Tuesday, Nov. 3, 2020.

ehyman@newsobserver.com

Student loan debt is one of the heaviest burdens weighing on folks in the United States. It became a hot topic again during the 2020 presidential campaign, and understandably so: it’s something that keeps millions of Americans in debt to the government or private financial groups. In addition, defaulting on student loans can amplify that burden by harmonizing credit scores for several years.

Earlier this month, US Reps. Deborah Ross (NC-02) and Alma Adams (NC-12) joined two of their House colleagues in a press conference for a package of bills that would change the landscape of national student loan debt by helping borrowers get back on track. The trio of bills—the Clean Slate through Repayment Act, Student Loan Rehabilitation and Credit Score Improvement Act and the Clean Slate Through Consolidation Act—are designed to boost the credit scores of those who defaulted on their loans but are now caught up with payments. On top of this, Joe Biden’s administration just delayed collection on student loans for the fifth time in two years and expunged the defaulted loans of about 8 million borrowers.

“Our Clean Slate bills will remove some of the greatest barriers students face in their pursuit of the American dream,” Ross said at the April 5 press conference. “We want to ensure these Americans can reach all of their goals – whether it’s buying a home, owning a car, starting a business, paying for their wedding, or saving for the future.”

What Ross and Adams are advocating for is not enough to deal with the huge burden of student debt facing North Carolinians, but it is absolutely necessary legislation. Currently, it takes about seven years for a defaulted federal student loan to be wiped from your credit report after you pay it. According to Ross, these bills would force the Department of Education to request consumer reporting agencies remove the default after repayment.

There are 46 million Americans trying to pay off $1.75 trillion in student loans. Breniecia Rueben, a tech worker in Raleigh, was one of those people. Her loans were relatively small — about $5,000 — but she defaulted on them without completing her degree. When she began evaluating her life in 2020, she realized her defaulted loans were weighing on her.

“I was trying to fix my credit score, because at the beginning of the pandemic, I was like, ‘I want to buy a house, I want to do all these things,’ but I was starting from ground zero,” Reuben told me.

After getting information from a friend who had also rehabilitated their credit score, Reuben was able to refinance her student loan payments to something more affordable. She wouldn’t have been aware of that program if it weren’t for the community help, and now she tries to help others looking for similar assistance.

Despite getting her loans out of default, which helps her credit score, it’ll take seven years before the default disappears from reports entirely. She sees the benefit of them dropping off sooner, but she also sees where it’d help everyone to forgive student loans en masse.

“If there were loan forgiveness, it would affect the people who don’t really have that much money now,” she says. “Because all our money is going to loan payments.”

What Ross and Adams are suggesting is good, but we shouldn’t settle for “good.” We must strive for the best outcome for everyone, and forgive more of the trillions of dollars in loan debt.

Sara Pequeño is a member of the Editorial Board.

Profile Image of Sara Pequeño

Sara Pequeño is a Raleigh-based opinion writer for McClatchy’s North Carolina Opinion Team and member of the Editorial Board. She graduated from the University of North Carolina at Chapel Hill in 2019, and has been writing in North Carolina ever since.

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Congress needs to keep student loan debt in the conversation


OPINION AND COMMENTARY

Editorials and other Opinion content offer perspectives on issues important to our community and are independent from the work of our newsroom reporters.

Deborah Ross speaks outside the North Carolina Democratic Party headquarters in Raleigh, NC, Tuesday, Nov. 3, 2020.

Deborah Ross speaks outside the North Carolina Democratic Party headquarters in Raleigh, NC, Tuesday, Nov. 3, 2020.

ehyman@newsobserver.com

Student loan debt is one of the heaviest burdens weighing on folks in the United States. It became a hot topic again during the 2020 presidential campaign, and understandably so: it’s something that keeps millions of Americans in debt to the government or private financial groups. In addition, defaulting on student loans can amplify that burden by harmonizing credit scores for several years.

Earlier this month, US Reps. Deborah Ross (NC-02) and Alma Adams (NC-12) joined two of their House colleagues in a press conference for a package of bills that would change the landscape of national student loan debt by helping borrowers get back on track. The trio of bills—the Clean Slate through Repayment Act, Student Loan Rehabilitation and Credit Score Improvement Act and the Clean Slate Through Consolidation Act—are designed to boost the credit scores of those who defaulted on their loans but are now caught up with payments. On top of this, Joe Biden’s administration just delayed collection on student loans for the fifth time in two years and expunged the defaulted loans of about 8 million borrowers.

“Our Clean Slate bills will remove some of the greatest barriers students face in their pursuit of the American dream,” Ross said at the April 5 press conference. “We want to ensure these Americans can reach all of their goals – whether it’s buying a home, owning a car, starting a business, paying for their wedding, or saving for the future.”

What Ross and Adams are advocating for is not enough to deal with the huge burden of student debt facing North Carolinians, but it is absolutely necessary legislation. Currently, it takes about seven years for a defaulted federal student loan to be wiped from your credit report after you pay it. According to Ross, these bills would force the Department of Education to request consumer reporting agencies remove the default after repayment.

There are 46 million Americans trying to pay off $1.75 trillion in student loans. Breniecia Rueben, a tech worker in Raleigh, was one of those people. Her loans were relatively small — about $5,000 — but she defaulted on them without completing her degree. When she began evaluating her life in 2020, she realized her defaulted loans were weighing on her.

“I was trying to fix my credit score, because at the beginning of the pandemic, I was like, ‘I want to buy a house, I want to do all these things,’ but I was starting from ground zero,” Reuben told me.

After getting information from a friend who had also rehabilitated their credit score, Reuben was able to refinance her student loan payments to something more affordable. She wouldn’t have been aware of that program if it weren’t for the community help, and now she tries to help others looking for similar assistance.

Despite getting her loans out of default, which helps her credit score, it’ll take seven years before the default disappears from reports entirely. She sees the benefit of them dropping off sooner, but she also sees where it’d help everyone to forgive student loans en masse.

“If there were loan forgiveness, it would affect the people who don’t really have that much money now,” she says. “Because all our money is going to loan payments.”

What Ross and Adams are suggesting is good, but we shouldn’t settle for “good.” We must strive for the best outcome for everyone, and forgive more of the trillions of dollars in loan debt.

Sara Pequeño is a member of the Editorial Board.

Profile Image of Sara Pequeño

Sara Pequeño is a Raleigh-based opinion writer for McClatchy’s North Carolina Opinion Team and member of the Editorial Board. She graduated from the University of North Carolina at Chapel Hill in 2019, and has been writing in North Carolina ever since.

.



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MCLR rates: Kotak Mahindra Bank revises MCLR on loans

MCLR rates: Kotak Mahindra Bank revises MCLR on loans


Kotak Mahindra Bank has revised the marginal cost of lending rate (MCLR) across loan tenors. The revised new rates are effective from April 16, 2022, according to the Kotak Mahindra Bank website.

The latest overnight MCLR is at 6.65% whereas it’s one month, three month and six month MCLR rates are 6.90%, 6.95% and 7.25%, respectively. And the one year, two year and three year rates are at 7.40%, 7.70% and 7.90%, respectively.

Kotak Mahindra Bank MCLR on loans

After the latest revision many types of loans will become more expensive.

The base rate of Kotak Mahindra Bank stands at 7.30% with effect from March 23, 2022.

Banks hike MCLR rates

Recently, Bank of Baroda, State bank of India, and Axis Bank revised their MCLR. While SBI hiked MCLR by 10 basis points, BOB and Axis bank have increased by 5 basis points. The Reserve Bank of India (RBI) kept the policy rates unchanged at its monetary policy meeting on April 8, 2022.

In determining the MCLR, the marginal cost of funds is a critical element. The MCLR will be affected by changes in key rates, such as the repo rate, that affect the marginal cost of funds. The increase in MCLR will be reflected in their EMIs(equated monthly installment) when their home loan reset date arrives.

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