Get Out of Debt Guy - Steve Rhode

National Collegiate Student Loan Trust Loans Are Fundamentally Problematic

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Attorney Richard Gaudreau unloaded on the issues facing consumers with National Collegiate Student Loan Trust loans in a recent piece on Huffington Post.

Gaudreau expanded on many of the same arguments I’ve raised about this pool of toxic student loans.

But Gaudreau added some new information that is very interesting. Having represented consumers in suits against National Collegiate Student Loan Trust he discovered some critical information.

“Lawyers defending borrowers from NCT lawsuits have found NCT susceptible to one defense in particular – that of standing. NCT never has a contractual relationship with a borrower, only acquiring a loan along with thousands of others after multiple assignments. The amount of SEC documentation necessary to assign securitized student loans multiple times is staggering, so it’s not surprising this “shell game” can create issues regarding who owns any particular loan. One recent New Hampshire case illustrating the problem is that of NCSLT 2006-1, 2007-4 v. Glynn, 219-2015-CV-00209 (NH Sup. Ct. 2015) where Judge Houran dismissed two lawsuits filed by NCT. NCLST sued Glynn who filed a motion to dismiss, alleging the court did not have subject matter jurisdiction to hear the dispute because plaintiff did not own the debt, and, therefore, had no standing.”

In a recent case of his the Judge stated:

The court determines that the evidence presented is insufficient to demonstrate that the plaintiff owns the debt. As noted above, the 2007 pool supplement assigned certain loans to NCF [i.e. National Collegiate Funding, LLC] – namely the loans listed on Schedule I. However, NCSLT has failed to provide the court with a copy of Schedule I. Without Schedule 1, the court cannot determine which loans Bank of America assigned to NCF. Thus, the court determines that NCSLT has failed to establish it owns Glynn’s debt.

This is an issue I raised in National Collegiate Student Loan Trust Loans are a True and Utter Mess Maybe People Don’t Owe.

And Gaudreau’s advice for consumers with National Collegiate Student Loan Trust loans is especially helpful if someone is considering hiring a document preparation student loan assistance company instead of an experienced lawyer. He says, “If you do decide to hire a lawyer, make sure it is someone who is experienced in NCT litigation. Securitizing thousands of private student loans at once involves a maze of documents where the important information is buried in the fine print. One of the key roles of a lawyer in complex litigation is to simplify the issues for a judge with limited time to devote to any one case. Like a game of ‘3 card monte,’ NCT litigation can be a real ‘shell game’ and knowing where to look can spell the difference between success and failure. Best case scenario, some of my clients have had their NCT’s cases dismissed. Worst case scenario, a lawyer can usually work out a favorable settlement.”

While Gaudreau says it’s not always wise to default on NCT loans, he also says, “It’s reasonable to require NCT to prove it owns your loans before a court orders you to pay an amount that with principal, interest and attorney’s fees dwarfs the original amount you borrowed.”

Attempting to get National Collegiate Student Loan Trust to properly validate the debt is a good step for consumers to take. The question is if people generally have the skills to ask for the appropriate debt validation information and know when they actually get it or a bluffed.


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