$5 billion in student loans may be dismissed because the lender lost the paperwork

Business Insider ^ | July 18, 2017 | Tanza Loudenback

[bgill]

Billions of dollars in student loans may be wiped out for tens of thousands of borrowers in the US because a lender didn't keep track of the paperwork verifying ownership of the loans, according to The New York Times. The National Collegiate Student Loan Trusts, which holds 800,000 private loans and is one of the country's largest owners of private student loans, is at the center of the legal dispute, the Times reported. Borrowers are failing to repay more than $5 billion of the $12 billion in private student loans held by National Collegiate, sending the loans into default. The organization has brought more than 800 lawsuits against borrowers this year alone in pursuit of repayment — and National Collegiate usually wins because borrowers either choose to settle or don't show up in court.

[Vermont Lt]

I do my own document imaging. Its not pretty. But it was pretty enough for the IRS. So that was good.

[Bloody Sam Roberts]

That’s not to say some politician won’t sneak a bill through to use taxpayer money to bail out the lenders.

For a nominal (read 6 or 7 figure) fee of course. Tax free and off the books.

[Bloody Sam Roberts]

Lost my a$$.

Was it painful?

[RedStateRocker]

I do several hundred thousand docs a year. Have done it for 15 years, for private and government orgs.

I’ve seen more than one outfit come in, offer lower prices and lose thousands of documents.

[PGR88]

Fed.gov at work

It doesn’t matter, because once any money is spent, Fed.gov doesn’t care

[CommerceComet]

This happened with a friend. They lost all his mortgage documents & in the end he was off the hook for 90k.

Just curious, but did you friend pay income tax on this? Loan cancellation is taxable income. Still, even paying taxes, that is a nice little benefit.

[LongWayHome]

That’s a good question, but I did not ask him, nor did he mention it. I know he had a lawyer help him at the time because they suspected that his paperwork was missing & his lawyer informed him that he had a chance of not having to pay back this loan. This was several years ago when many home loans were crashing & law firms were aggressive in helping their clients look for an out due to all this bad paperwork.

[WKUHilltopper]

As painful as no edit option.

[<1/1,000,000th%]

At least the paperwork for the other $1 and a half trillion in school loans is safe.

[Neidermeyer]

Just curious, but did you friend pay income tax on this? Loan cancellation is taxable income.
*************
Probably not ,,, in his case the supposed creditor could not show they owned the note ,, therefore logically they could not cancel the debt as they could not show they owned the debt. In matters like this the borrower is still “on the hook” if the rightful creditor steps up with valid documentation... If enough time has passed that the debt is no longer collectible then the borrower should file a suit to discharge the recorded lien to clear title.

[fella]

How many subprime mortgages and car loans are out there that the holders of can’t be traced?

[Osage Orange]

Sure....until the banks want a bailout...from Uncle Sam.

[cherry]

my dtr proudly paid off her student loans about 2 months ago....this will teach her to become a true fiscal conservative....

and that the lazy cheaters win all the time..

[mrsmith]

Ah. "The wonders of the paperless office!"... and they saved all those trees!

[Sequoyah101]

From each according, to each according.

Now payup chump. /s

We will die hanging by our ankles as they shake the last penny from our pockets.

[Hugin]

I don’t see how the taxpayers are ever going to have to pay. If there’s no paper trail to the original loans, they won’t be able to collect on government guarantees either. At least that’s my non-lawyer take. You would think that they would have learned from the mortgage loan bundling fiascos 10 years back.

[Titus-Maximus]

The National College Student Loan Trust is a securitization vehicle. This is like the mortgage backed security crisis, and both stem from government interference in the market place....to make things worse.

They increase the costs of higher education, and now defaulting on the debt.

[SMARTY]

I didn’t borrow to get through college. I worked. It took longer but when I graduated, I had no debt.

[Chickensoup]

I was thinking just that.

When people think of college loans they think of four year ivy leagues not the Petunia College of Hairdressing, and all the hood colleges.

[bert]

-—the lender can’t produce the note-—

that is.....the lender can’t produce the note

bears repeating
the lender can’t produce the note
the lender can’t produce the note

no note, no loan
no loan, no obligation to pay