I can see it now. Mickey Rooney and Judy Garland decide to put on a musical rather than pay back money they borrowed for college, but mean old Lionel Barrymore at Suckers Trust tries to stop them.
"What's a deadbeat? Can you dance to it?"
Posted on 09/18/2017 12:25:28 PM PDT by sparklite2
WASHINGTON (Reuters) - The U.S. Consumer Financial Protection Bureau said on Monday it had ordered National Collegiate Student Loan Trusts and their debt collector, Transworld Systems, Inc to pay at least $21.6 million in penalties and restitution for illegally filing debt collection lawsuits.
According to the agency, the companies allegedly sued borrowers without being able to prove the debt was owed or pursued collection on loans that were too old to sue over, and relied on false and misleading legal documents. The CFPB said the trusts had filed at least 486 lawsuits on debt where the statute of limitations for collections had expired.
(Excerpt) Read more at reuters.com ...
I can see it now. Mickey Rooney and Judy Garland decide to put on a musical rather than pay back money they borrowed for college, but mean old Lionel Barrymore at Suckers Trust tries to stop them.
"What's a deadbeat? Can you dance to it?"
“pursued collection on loans that were too old to sue over”
Say what ?
Thanks, Grandma, for making sure I never needed student loans!
Who gets the 21 million?
I’ve noticed in several class action lawsuits against banks and brokerage firms for alleged wrongdoing, the injured customers don’t seem to get much, if anything.
Straight to the government coffers.
Is this legitimate or some kind of a shakedown?
Yes, most states have a statute of limitations for a breach of contract lawsuit, which is what collecting on a student loan is. And 99% of creditors will sue in a timely manner so there's not that much incentive to default. Many of the highly regulated student loans in private hands have been discounted (ie. bought and sold among creditors)so many times that these screw ups occur. That's not the case for most loans.
This reminds me of a couple of early shots fired in the credit crisis in 2008. The home loans had been bundled so many times that sometimes the deed of trust is separated from the promissory note.
In a couple of cases in the north east US, the holders of the mortgages (by then, part of a bundle of loans that was the problem with the whole thing) tried to foreclose, and when it went to court, the owners lawyered up. The judge asked the plaintiffs to show proof they had grounds to sue. The plaintiffs balked because that was usually just a formality. But the judge required the full mortgage, including deed of trust and promissory note. The plaintiff could not come up with the paperwork.
I’m really oversimplifying and may have a detail or two wrong, but what it came down to was that after the mortgage changed hands, was bundled as a larger investment instrument, etc. eventually the necessary components of the loan became separated.
This happened quite a bit, I believe. I think it’s why a friend in Seattle, rather than walking away from their home which they bought only a month before the bottom fell out, lived in it for over 8 years without making a single payment after their first monthly payment. The whole time they “negotiated” with the bank and eventually DID walk away.
https://www.youtube.com/watch?v=M1F0lBnsnkE
That was outstanding. Someone put a lot of time into that and did a marvelous job. Highly recommend.
You and JennysCool...
I can’t believe it, but I found a PDF discussing the exact issue I was talking about.
http://law.missouri.edu/whitman/files/2013/12/Foreclosing-on-Nothing.pdf
Re: “The whole time they “negotiated” with the bank and eventually DID walk away.”
Sounds like your friends were beneficiaries of the Seattle home price explosion that started around 2009.
I’ll guess that they took really good care of the house and the bank let them stay as long as the home value was going up 10%-15% a year.
Not for federal student loans!
Plus the debt remains. It is not wiped off the books.
They never made a payment. They just walked away. They were beneficiaries of this:
http://law.missouri.edu/whitman/files/2013/12/Foreclosing-on-Nothing.pdf
All those mortgage payments they didn’t make add up. :)
Why just today I received an unanswered call from a local exchange and while I didn’t answer, ‘they’ did leave a message.
I check out the message and they informed me that they were ‘here to help’ me on my current student loan.
Even left me a case # and my (supposedly) loan # and asked me to call them back.
I was suspicious of the call/message since
a/I didn’t attend college.
b/see a/, above
I immediately put them on my VERY LARGE BLOCK CALL LIST.
A good invention would be something that recognizes the call and after a few minutes, auto answers, mumble something - real low - and in a few secs blast them with a Klaxon Horn.
Yes, I realize the caller is only working for a living and ‘we’ should treat them with respect (barf) but until ‘they’ start paying MY phone bill, I will answer howsomever as I please.
A good friend of mine almost got foreclosed on.
His payments were on time. He was not behind. His loan got sold three times and one of the companies didn’t even forward the paperwork.
It took him a while to get it sorted out, but they refused to admit wrong doing. So he had to eat the legal costs.
This company had fraudulently foreclosed on more than a few properties.
Ha! Yup. Both named after our girlfriends, I’m guessing. Ex, in my case :)
In the US, there are two different types of student loans - federally-backed, and private. Federally-backed student loans are about $1.1 trillion of the total student loan “market,” while private loans are another $300 billion.
It looks like this stuff applies to private loans. Private loans were treated the same as any other form of consumer debt until the 2005 bankruptcy reform act, which made it extremely difficult to discharge them in bankruptcy. The lack of a “market signal” in the form of bankruptcy led to over-lending, rising defaults, and shady third-party debt collection firms which have apparently failed to maintain proper paperwork on these debts - ie, they can’t even prove if they have the legal right to collect.
And if they can’t prove that, then any debts you “repay” to them are basically stolen, since the true holder of the debt can come back later and sue for collection. So it’s a big mess.
Sounds like the Obama scam to fine companies and pass the money
To his liberal friends. I thought Jeff sessions put a stop to that scam? Oh well. Besides why not file law suites? They borrowed the money. Right?
There is a statute of limitations on all debts except those owed to the government.
You will ruin your credit and the bill stays on your credit history forever so people know not to loan money to you.
This is nothing new.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.