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CFPB Sues National Collegiate Student Loan Trust and Enters Into Proposed Judgment

By on September 19, 2017
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The Consumer Financial Protection Bureau (CFPB) has filed suit against National Collegiate Student Loan Trust (NCSLT). Thank goodness. Those student loans were an utter mess.

The CFPB alleges NCSLT engaged in activities to support their lawsuits and those suits lacked critical information to be valid.

On September 18, 2017 NCSLT and the CFPB submitted to the court a consent judgment for the court to approve.

The court document states, “Since at least November 1, 2012, in order to collect on defaulted private student loans, Defendants’ Servicers filed Collections Lawsuits on behalf of Defendants in state courts across the country. In support of these lawsuits, Subservicers on behalf of Defendants executed and filed affidavits that falsely claimed personal knowledge of the account records and the consumer’s debt, and in many cases, personal knowledge of the chain of assignments establishing ownership of the loans. In addition, Defendants’ Servicers on behalf of Defendants filed more than 2,000 debt collections lawsuits without the documentation necessary to prove Trust ownership of the loans or on debt that was time-barred. Finally, notaries for Defendants’ Servicers notarized over 25,000 affidavits even though they did not witness the affiants’ signatures.”

Consumers facing pending lawsuits over NCSLT debt will be covered by, “With regard to pending Collections Lawsuits in which Defendants, through actions taken by Defendants’ Servicers acting on behalf of Defendants, have filed an Affidavit that contains any misrepresentations—including but not limited to false statements that the Affiant (1) is familiar with or has personal knowledge of the Consumer’s education loan records or the maintenance of those records, (2) has personal knowledge of the Consumer’s indebtedness, (3) has personal knowledge of the loan’s chain of assignment or ownership, (4) has personal knowledge about the maintenance of documents relating to the loan’s chain of assignment or ownership, or (5) has attached as an exhibit a true and correct copy of a document—Defendants must either withdraw the pending Collections Lawsuit or ensure that the Affidavit is withdrawn.”

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Regarding any lawsuits NCSLT undertook in the past, the agreement with the CFPB says, “With regard to concluded Collections Lawsuits in which Defendants, through actions of Defendants’ Servicers acting on behalf of Defendants, filed with a court or in arbitration an Affidavit that contained any misrepresentations—including but not limited to false statements that the Affiant (1) is familiar with or has personal knowledge of the Consumer’s education loan records or the maintenance of those records, (2) has personal knowledge of the Consumer’s indebtedness, (3) has personal knowledge of the loan’s chain of assignment or ownership, (4) has personal knowledge about the maintenance of documents relating to the loan’s chain of assignment or ownership, or (5) has attached as an exhibit a true and correct copy of a document—Defendants must instruct their attorneys, the Defendants’ Servicers, and their agents to cease postjudgment enforcement activities and will seek, and will instruct their agents to seek, to remove, withdraw, or terminate any active wage garnishment, bank levies, and similar means of enforcing those judgments or settlements as well as cease accepting settlement payments related to any such concluded Collections Lawsuits.”

NCSLT will also deposit $3.5 million that will be used to “provide full restitution of all amounts collected since the initiation of the Collections Lawsuit filed against them from the approximately 2,700 Affected Consumers identified.”

NCSLT “shall pay $7,800,000 as disgorgement for the proceeds they received from the unlawful practices related to the filing of Collections Lawsuits during the Relevant Period.

You can read the full proposed Consent Judgment here.

You can read the CFPB lawsuit here.

About Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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