As Paperwork Goes Missing, Billions in Private Student Loan Debts May Be Wiped Away

NY Times via MSN ^ | STACY COWLEY, JESSICA SILVER-GREENBERG

[Libloather]

Tens of thousands of people who took out private loans to pay for college but have not been able to keep up payments may get their debts wiped away because critical paperwork is missing.

The troubled loans, which total at least $5 billion, are at the center of a protracted legal dispute between the student borrowers and a group of creditors who have aggressively pursued them in court after they fell behind on payments.

Judges have already dismissed dozens of lawsuits against former students, essentially wiping out their debt, because documents proving who owns the loans are missing. A review of court records by The New York Times shows that many other collection cases are deeply flawed, with incomplete ownership records and mass-produced documentation.

[Jim Robinson]

For the time being. But the taxpayers will end up with the shaft before it’s all over.

[Garth Tater]

Now next year some accountant finds your paperwork at company 234 and they have no idea why you’re not paying them ,, they take you to court and have the paperwork... YOU PAY THEM TOO.

This is a big problem for both lenders and borrowers which strangely enough was solved centuries ago.

In common law real estate transactions must be in writing (verbal contracts are not binding) and they must be filed at the court house in the county where the real estate exists, so if you want to know who owns your mortgage you go down to the court house and look. Then the big banks developed the MERS (Mortgage Electronic Registration System) to handle the go-go real estate mortgage bundling, slicing and dicing of the 2000-2008 years. It made it possible for the big banks to slice loans that were made to good credit risks out of pools of overall average or even sub-prime mortgages and turn them into AAA investments which they could then use as the basis of massive rehypothecation schemes netting the big banks billions (maybe trillions??)

Millions of mortgages changed hands many times in the buying and selling of these mortgage tranches. Unfortunately, in all the hustle and bustle the buyers forgot to file the paperwork documenting the changing ownerships in the court houses. Whoops. That's illegal and invalidates their ownership claims and also clouds the title which harms the property owner.

Luckily the banks were to big to fail and too big to jail and even too big to hold to following the law. They messed up (clouded) the titles to millions of pieces of property and the courts all said, "Well, that's okay, we'll ignore the law because it would be a big problem if we didn't." And it was all swept under the rug. I've been waiting for it to come back and bite some butts. Still waiting...

[Garth Tater]

And if any of the notes were in default when supposedly purchased then the current owner has no claim as they bought something with a zero value.

I'd never considered that. Thanks. Freepers teach me something every day.

[Neidermeyer]

I’ve been waiting for it to come back and bite some butts. Still waiting...
***************
Butts are being bit but individually ,, not wholesale (and when they are they are subject to gag orders as part of the negotiated buyoff) ... I am a single piranha not a great white... luckily my adversary is incredibly stupid and relying on the kindness of the judge to win... All I need has already been discovered and is public record if you know where to look... they’re digging a very deep fraud hole for themselves right now.

[Garth Tater]

Butts are being bit but individually ,,

I should have specified wholesale biting of institutional sized butts LOL

luckily my adversary is incredibly stupid and relying on the kindness of the judge to win...

Good luck. As you know the courts no longer feel bound by the letter of the law. Too big to fail applies to them. Not you. What's that Mencken quote about there comes a time when every decent man must be tempted to spit on his hands, hoist the black flag, and begin slitting throats??? He was spot on with that one.

[leaning conservative]

Bkmk

[tbw2]

The issue is better defined as:
You took out student loan with A.
They sold the debt to B.
Group C says you owe them the money, send it. Are they a scammer preying on the indebted? Is it legit? Show me the right to collect. Oh, wait, you can’t? I don’t have to pay you, I’m paying B.

[Axenolith]

Original loan work has to have a wet ink signature.

[Axenolith]

With the loans being unable to be discharged in bankruptcy handlers scheme rabidly to get borrowers to “miss” a payment. In short order the balance can balloon absurdly and they are a debt serf for decades.

Because of the bankruptcy exemption lenders will loan to anything that will fog a mirror, there is no risk pricing or scaling of amounts based on potential future income. It’s a racket, even if you’re punctually honest you risk your financial future taking a student loan.

[Axenolith]

Literally so many billions that they run out of smart people to educate and have to open whole new buildings for subjects like gender studies et. al. to pack in mouth breathers and turn them into libtards!

[grundle]

Ms. Watson, the first in her family to go to college, took out private loans to finance her studies. But she said she had trouble following the fine print. “I didn’t really understand about things like interest rates,” she said. “Everybody tells you to go to college, get an education, and everything will be O.K. So that’s what I did.”

This person is too dumb to be attending college in the first place.

[Rashputin]

"... or all the Army’s service records get destroyed in a fire"

Funny how that goes. Proof that the government is obligated to those who risked it all for the nation vanish right along with the proof that those who wouldn't didn't do a thing other than look out for themselves. Kinda like banks being bailed out while "little people" are told they made a bad decision so they have to deal with the consequences.

This country has officially become a banana republic run by a corrupt nobility who are above the law.

[Right Wing Assault]

"Hey, Jimmy, I work for the company that owns our student loan accounts. I just erased our records! Uh, oh. I think I messed up..."

[Keyhopper]

Woah, no need together snarky.
Some student loans are with Sallie Mae.
SM has a track record of not keeping records.

[bigdaddy45]

Not snarky at all. Just gets boring when we try and blame EVERYTHING on Obama. It dilutes the argument and is intellectually weak.

[Keyhopper]

My biggest beef with the big O.
In 2008 when most of this country was unemployed he got busy on healthcare instead a jobs.

[Diana in Wisconsin]

I guess the concept of taking on massive student loan debt to begin with is so foreign to me that none of this computes. I ‘went to college’ over the course of many years via the Army and Mastercard. You CAN earn a degree (even a WORTHLESS liberal Arts degree, should you desire!) without taking on student loan debt.

Mortgages? Construction loans? Sure! And I always paid them off ahead of time back when I was flipping houses. Nobody bailed me out. ;)

[Neidermeyer]

You always knew who you owed the money to ,, that is no longer the case and it’s intentional ,, the banksters have fought against THEIR RESPONSIBILITIES for decades now and have this crazy idea that they are above the law.