National Collegiate Student Loan Trust (NCSLT) is a messed up private student loan player. I still think their daily suits against people could be defeated with smart legal brains representing consumers because the debts would struggle to be validated if challenged.
The debacle over the chopped up and the divided pool of student loan debt has been raging for years now. Just look at all the past posts on this subject.
In 2017 the NCSLT entered into a settlement agreement with the CFPB to clean up the mess. One of the underlying investors objected. So every day since then it seems consumers are being sued over debts NCSLT already agreed to stop collection lawsuits and collecting past judgments. – Source
The agreed settlement offered even more for consumers that had been financially injured by the NCSLT actions.
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On July 20, 2020, the CFPB exasperatedly asked the Court to put this entire issue to bed. The CFPB said, “Almost three years after this case was filed, student borrowers harmed by Defendants’ illegal practices are still awaiting the remediation they deserve, and additional students who may have been similarly harmed have not been identified. No further delay is warranted.”
But just so this issue won’t be put to rest, the Structured Finance Association has poked their nose into this mess with a recent court filing. Basically, the Association wants this entire issue to go away on a technicality and that still leaves the underlying putrid loans consumers are shouldering the burden of.
And I get it, the Association is trying to stand up for institutional investors that are trying to make money. Hey, that’s capitalism at its finest.
But at what cost and misrepresentation is it okay to profit off consumers by bad acts?
The Association states, “The Proposed Consent Judgment further poses a risk to securitization investors. These investors expect to take the risk of delinquencies and defaults in the performance of trust assets. Substantial steps are taken in the syndication and marketing process to assure investors of the quality of the assets, including extensive disclosure requirements, third party diligence reviews and, more recently, risk retention. The risk of delinquency and default is analyzed in great detail. Imposing on investors the additional and unquantifiable risk of substantial liability of the trusts, for actions which neither investors nor the trustee could promote or advocate, and which they could not in any way conduct, control or predict, would be highly destructive to the securitization market. Allowing the Bureau to overextend its enforcement authority, as it is attempting to do in this case, by choosing its own definition of “covered person” would frustrate legislative intent and legitimate contractual rights.”
One could argue this entire situation was created when the investors rushed to participate in an investment that was fatally flawed from the start. If they analyzed the investment in such great detail then why didn’t they structure the deal to avoid deceptive servicing and make sure the documentation on the loans was preserved?
And tomorrow will be another day a consumer will have their financial life trashed just because there are no adults in the room to accept responsibility and move this mess forward to a resolution.