7 ms·

A student loan collector must halt collections

59 points by twunde 9y ago

greenyoda 9y ago
"Those borrowers had made payments after being sued over loans that were legally uncollectable, either because the statute of limitations had passed or because National Collegiate lacked the documentation needed to collect the debts in court." This sounds a lot like what was happening during the financial crisis a decade ago. Lenders were selling mortgage loans to Wall Street to be bundled into collateralized debt obligations. After those CDOs got sold a few times, people lost track of who actually owned a particular loan. When borrowers defaulted, it was in many cases impossible to prove who was legally entitled to collect on the debt. (A line in a spreadsheet that says John Doe owes you $500K is not very convincing evidence to a judge - you need to be able to provide a document with John Doe's signature on it.)
- roarktoohey 9y ago
  Flip side is paper documentation is poor UX.
- mirimir 9y ago
  Yes, exactly the same problem. I don't get how lawyers could have signed off on bundling without documentation. I mean, databases can store BLOBs.
  - tryingagainbro 9y ago
    Cost vs benefit? The loss was acceptable enough maybe. Some of the loans are bought for 3 cents on a dollar...you get what you pay for
    - mirimir 9y ago
      > ... bought for 3 cents on a dollar ... So some jerk is buying a $50K loan for $1.5K. But trying to collect $50K, plus fees and penalties. And ruining someone's credit in the process. That's insane.
      - perl4ever 9y ago
        Don't you think it's priced at 3 cents because they only collect the full amount 3% of the time?
        mirimir 9y ago
        Sure, but those 3% have their lives 100% destroyed. So it's still a crime. I mean, if I try to poison 100 people, and only get three, is that cool?
- deleted 9y ago
  [deleted]
- ams6110 9y ago
  > After those CDOs got sold a few times, people lost track of who actually owned a particular loan. When borrowers defaulted, it was in many cases impossible to prove who was legally entitled to collect on the debt. Sounds fishy. The borrower was paying somebody at least up until he defaulted. Would not that entity be the one entitled to try to collect? Or were loans actually in default being sold around?
  - derekp7 9y ago
    They would be paying the loan originator (the bank where they got the loan from), who is still servicing the loan (in exchange for a fee from whoever they sold the loan to). But the original paperwork goes to the new owner of the debt.
    - goialoq 9y ago
      Not quite, they'd be paying the servicer, whoever the loan holder contracted that to.
  - ChuckMcM 9y ago
    http://www.nolo.com/legal-encyclopedia/produce-the-note-defense-foreclosure.html http://www.nolo.com/legal-encyclopedia/produce-the-note-defe... for some more detail. But it was, initially, a good strategy if you were being foreclosed to demand the person filing the motion could prove they held the note.
- KGIII 9y ago
  My son got a letter insisting he owed money on his college loan. He never had a loan. I paid for his education without any loans. He asked for documentation and they stalled. I finally had my lawyer write a letter on his behalf and, sure enough, they had made an error and were deeply sorry for our inconvenience. Notably, they didn't offer to cover my time, his time, and the expense of the lawyer. I value my time more than I value money. I consider these things theft of my time.
  - javajosh 9y ago
    Did you consider taking them to small claims court to recover your costs?
    - johnvonneumann 9y ago
      This, I don't consider myself a vindictive person, but financial vultures need to be punished.
    - KGIII 9y ago
      Not really. The thought crossed my mind but I figured it'd just be more of my time being spent. I can make more money. My time is a finite commodity. I'd rather waste it on fun things.
      - joering2 9y ago
        Didnt you think for a minute of your precious time that you had perfect opportunity to teach them a lesson and burn some of their money in the process? These scumbags dont exist because we dont have laws strictly prohibiting what they doing - they exist because only very tiny fraction of people they tried defraud will do something about it.
        KGIII 9y ago
        Nope.
    - 35bge57dtjku 9y ago
teekert 9y ago
It's mind-boggling how a nation is able to develop a system that forces its young to spend a large part of their life paying for the salaries of bank employees and managers, simply because they want an education. It's even more mind-boggling that these students can then get rid of this dept easiest by joining the system themselves, simply shuffling around money to make more money to pay off their dept. And then Jamie Dimon calls Bitoin a ponzi scheme... Our entire economy is a ponzi scheme. All of our money is created as dept, as such banks collect money on all of the money ever created. They create nothing of value for this. Why do we accept this?
- Swizec 9y ago
  > Why do we accept this? Because buying a new car/house/collegedegree with money you don’t have is easier than with money you do have. Hell, you’re on HN. Chances are your salary comes from somebody convincing somebody that they should be given money because in just a few short years they’re gonna have like so much more money. I know mine does
  - teekert 9y ago
    These items are only so expensive that we have to get a loan because we can get a loan. And banks benefit from every loan, which is basically a claim on your future productivity. And I'm guessing your salary comes from a rich person, not from a bank that created the money as dept from thin air and now asks someone to pay them rent for said service.
- NiklasMort 9y ago
  "Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires." John Steinbeck
  - gadders 9y ago
    People repeatedly post this [1] as they think it shows how stupid Americans are. I read this and I think it shows how exceptional and amazing America is (and I'm not American). In Venezuela they are currently telling people to eat rabbits as Socialism is working out so well for them. [1] https://hn.algolia.com/?query=Socialism%20never%20took%20root%20in%20America%20because&sort=byPopularity&prefix&page=0&dateRange=all&type=comment https://hn.algolia.com/?query=Socialism%20never%20took%20roo...
osrec 9y ago
Student loans are becoming insane. My own loan was initially government issued with a reasonable interest rate, but a year after finishing uni, it was sold off to a private fund that decided to jack up the interest rate to nearly 7%! In the UK, education used to be free. Now kids are leaving 3rd grade universities with 50k GBP debt, a ridiculously high interest rate and no quality job prospects. That's a lot of pressure on young shoulders (my sibling is going through this currently, and I can see how distressing it is). And they wonder why young people can't get on the property ladder! The ignorance on behalf of the government is astounding! I'm not sure I'd want my kids to go through that, even if it means missing out on the social experiences of university.
- pjc50 9y ago
  The UK system has the weird and politically contingent "forgiveness at retirement" element, which means that theoretically it has a lifetime cap and behaves a bit like an income tax on graduates. The catch is it's something like a 9% income tax! The worst thing is that the three big national parties(+) all have their fingers on this, so I'm not sure who you could rely on to fix it. And whether it might have to come with rationing to a certain fraction of the population being able to get free university. Not to mention that education is a vital export industry which the Home Office keeps trying to destroy. (+) The third largest party by MPs is the SNP who only stand in Scotland, where they have ruled out tuition fees
tryingagainbro 9y ago
"A random sample of nearly 400 National Collegiate loans found not a single one had assignment paperwork documenting the chain of ownership, according to a report they had prepared." https://mobile.nytimes.com/2017/07/17/business/dealbook/student-loan-debt-collection.html https://mobile.nytimes.com/2017/07/17/business/dealbook/stud... Why aren't judges fining them /their lawyers? Can I sue John Doe and demand that he pay me the money he took for his mortgage? Before filing a lawsuit, the "I bought your loan so pay me" chain should be settled in an acceptable way. Otherwise it's fraud.
- colejohnson66 9y ago
  Sanctioning a lawyer isn’t as easy as people think it is. It took years to take down the Prenda lawyers
sgs1370 9y ago
I'm obviously very old compared to the target audience. I was accepted to Columbia and Texas A&M and chose Texas A&M because I had various scholarships that paid for my tuition and room/board. I had some scholarships to go to Columbia but was facing debt of ~20k/year so I choose to go to A&M instead. My life is fine but I don't have a lot of sympathy for people who take out huge loans. (I had to work after my freshman year and I didn't go out a lot etc.) Not seeking sympathy for me, just saying I don't have any desire to "forgive" the loans for anyone. I don't know the solution but having the govt secure all loans and think about forgiving them is not going to help the next generation. Where is the incentive for univ to bring their costs down? Also, where is the incentive for people to either shop for a college they can afford, or even forgo college in favor of some other training or on the job experience?

59 points by twunde 9y ago

"Those borrowers had made payments after being sued over loans that were legally uncollectable, either because the statute of limitations had passed or because National Collegiate lacked the documentation needed to collect the debts in court." This sounds a lot like what was happening during the financial crisis a decade ago. Lenders were selling mortgage loans to Wall Street to be bundled into collateralized debt obligations. After those CDOs got sold a few times, people lost track of who actually owned a particular loan. When borrowers defaulted, it was in many cases impossible to prove who was legally entitled to collect on the debt. (A line in a spreadsheet that says John Doe owes you $500K is not very convincing evidence to a judge - you need to be able to provide a document with John Doe's signature on it.)

roarktoohey 9y ago
Flip side is paper documentation is poor UX.
mirimir 9y ago
Yes, exactly the same problem. I don't get how lawyers could have signed off on bundling without documentation. I mean, databases can store BLOBs.
- tryingagainbro 9y ago
  Cost vs benefit? The loss was acceptable enough maybe. Some of the loans are bought for 3 cents on a dollar...you get what you pay for
  - mirimir 9y ago
    > ... bought for 3 cents on a dollar ... So some jerk is buying a $50K loan for $1.5K. But trying to collect $50K, plus fees and penalties. And ruining someone's credit in the process. That's insane.
    - perl4ever 9y ago
      Don't you think it's priced at 3 cents because they only collect the full amount 3% of the time?
      - mirimir 9y ago
        Sure, but those 3% have their lives 100% destroyed. So it's still a crime. I mean, if I try to poison 100 people, and only get three, is that cool?
deleted 9y ago
[deleted]
ams6110 9y ago
> After those CDOs got sold a few times, people lost track of who actually owned a particular loan. When borrowers defaulted, it was in many cases impossible to prove who was legally entitled to collect on the debt. Sounds fishy. The borrower was paying somebody at least up until he defaulted. Would not that entity be the one entitled to try to collect? Or were loans actually in default being sold around?
- derekp7 9y ago
  They would be paying the loan originator (the bank where they got the loan from), who is still servicing the loan (in exchange for a fee from whoever they sold the loan to). But the original paperwork goes to the new owner of the debt.
  - goialoq 9y ago
    Not quite, they'd be paying the servicer, whoever the loan holder contracted that to.
- ChuckMcM 9y ago
  http://www.nolo.com/legal-encyclopedia/produce-the-note-defense-foreclosure.html http://www.nolo.com/legal-encyclopedia/produce-the-note-defe... for some more detail. But it was, initially, a good strategy if you were being foreclosed to demand the person filing the motion could prove they held the note.
KGIII 9y ago
My son got a letter insisting he owed money on his college loan. He never had a loan. I paid for his education without any loans. He asked for documentation and they stalled. I finally had my lawyer write a letter on his behalf and, sure enough, they had made an error and were deeply sorry for our inconvenience. Notably, they didn't offer to cover my time, his time, and the expense of the lawyer. I value my time more than I value money. I consider these things theft of my time.
- javajosh 9y ago
  Did you consider taking them to small claims court to recover your costs?
  - johnvonneumann 9y ago
    This, I don't consider myself a vindictive person, but financial vultures need to be punished.
  - KGIII 9y ago
    Not really. The thought crossed my mind but I figured it'd just be more of my time being spent. I can make more money. My time is a finite commodity. I'd rather waste it on fun things.
    - joering2 9y ago
      Didnt you think for a minute of your precious time that you had perfect opportunity to teach them a lesson and burn some of their money in the process? These scumbags dont exist because we dont have laws strictly prohibiting what they doing - they exist because only very tiny fraction of people they tried defraud will do something about it.
      - KGIII 9y ago
        Nope.
  - 35bge57dtjku 9y ago

teekert 9y ago

It's mind-boggling how a nation is able to develop a system that forces its young to spend a large part of their life paying for the salaries of bank employees and managers, simply because they want an education. It's even more mind-boggling that these students can then get rid of this dept easiest by joining the system themselves, simply shuffling around money to make more money to pay off their dept. And then Jamie Dimon calls Bitoin a ponzi scheme... Our entire economy is a ponzi scheme. All of our money is created as dept, as such banks collect money on all of the money ever created. They create nothing of value for this. Why do we accept this?

Swizec 9y ago
> Why do we accept this? Because buying a new car/house/collegedegree with money you don’t have is easier than with money you do have. Hell, you’re on HN. Chances are your salary comes from somebody convincing somebody that they should be given money because in just a few short years they’re gonna have like so much more money. I know mine does
- teekert 9y ago
  These items are only so expensive that we have to get a loan because we can get a loan. And banks benefit from every loan, which is basically a claim on your future productivity. And I'm guessing your salary comes from a rich person, not from a bank that created the money as dept from thin air and now asks someone to pay them rent for said service.
NiklasMort 9y ago
"Socialism never took root in America because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires." John Steinbeck
- gadders 9y ago
  People repeatedly post this [1] as they think it shows how stupid Americans are. I read this and I think it shows how exceptional and amazing America is (and I'm not American). In Venezuela they are currently telling people to eat rabbits as Socialism is working out so well for them. [1] https://hn.algolia.com/?query=Socialism%20never%20took%20root%20in%20America%20because&sort=byPopularity&prefix&page=0&dateRange=all&type=comment https://hn.algolia.com/?query=Socialism%20never%20took%20roo...

osrec 9y ago

Student loans are becoming insane. My own loan was initially government issued with a reasonable interest rate, but a year after finishing uni, it was sold off to a private fund that decided to jack up the interest rate to nearly 7%! In the UK, education used to be free. Now kids are leaving 3rd grade universities with 50k GBP debt, a ridiculously high interest rate and no quality job prospects. That's a lot of pressure on young shoulders (my sibling is going through this currently, and I can see how distressing it is). And they wonder why young people can't get on the property ladder! The ignorance on behalf of the government is astounding! I'm not sure I'd want my kids to go through that, even if it means missing out on the social experiences of university.

pjc50 9y ago
The UK system has the weird and politically contingent "forgiveness at retirement" element, which means that theoretically it has a lifetime cap and behaves a bit like an income tax on graduates. The catch is it's something like a 9% income tax! The worst thing is that the three big national parties(+) all have their fingers on this, so I'm not sure who you could rely on to fix it. And whether it might have to come with rationing to a certain fraction of the population being able to get free university. Not to mention that education is a vital export industry which the Home Office keeps trying to destroy. (+) The third largest party by MPs is the SNP who only stand in Scotland, where they have ruled out tuition fees

tryingagainbro 9y ago

"A random sample of nearly 400 National Collegiate loans found not a single one had assignment paperwork documenting the chain of ownership, according to a report they had prepared." https://mobile.nytimes.com/2017/07/17/business/dealbook/student-loan-debt-collection.html https://mobile.nytimes.com/2017/07/17/business/dealbook/stud... Why aren't judges fining them /their lawyers? Can I sue John Doe and demand that he pay me the money he took for his mortgage? Before filing a lawsuit, the "I bought your loan so pay me" chain should be settled in an acceptable way. Otherwise it's fraud.

colejohnson66 9y ago
Sanctioning a lawyer isn’t as easy as people think it is. It took years to take down the Prenda lawyers

sgs1370 9y ago

I'm obviously very old compared to the target audience. I was accepted to Columbia and Texas A&M and chose Texas A&M because I had various scholarships that paid for my tuition and room/board. I had some scholarships to go to Columbia but was facing debt of ~20k/year so I choose to go to A&M instead. My life is fine but I don't have a lot of sympathy for people who take out huge loans. (I had to work after my freshman year and I didn't go out a lot etc.) Not seeking sympathy for me, just saying I don't have any desire to "forgive" the loans for anyone. I don't know the solution but having the govt secure all loans and think about forgiving them is not going to help the next generation. Where is the incentive for univ to bring their costs down? Also, where is the incentive for people to either shop for a college they can afford, or even forgo college in favor of some other training or on the job experience?