$12 Billion In Private Student Loan Debt May Be Wiped Away By Missing Paperwork (nytimes.com) 399
New submitter cdreimer shares a report from The New York Times (Warning: source may be paywalled; alternate source): Tens of thousands of people who took out private loans to pay for college but have not been able to keep up payments may get their debts wiped away because critical paperwork is missing. The troubled loans, which total at least $5 billion, are at the center of a protracted legal dispute between the student borrowers and a group of creditors who have aggressively pursued them in court after they fell behind on payments. Judges have already dismissed dozens of lawsuits against former students, essentially wiping out their debt, because documents proving who owns the loans are missing. A review of court records by The New York Times shows that many other collection cases are deeply flawed, with incomplete ownership records and mass-produced documentation. Some of the problems playing out now in the $108 billion private student loan market are reminiscent of those that arose from the subprime mortgage crisis a decade ago, when billions of dollars in subprime mortgage loans were ruled uncollectable by courts because of missing or fake documentation. And like those troubled mortgages, private student loans -- which come with higher interest rates and fewer consumer protections than federal loans -- are often targeted at the most vulnerable borrowers, like those attending for-profit schools.
At the center of the storm is one of the nation's largest owners of private student loans, the National Collegiate Student Loan Trusts. It is struggling to prove in court that it has the legal paperwork showing ownership of its loans, which were originally made by banks and then sold to investors. National Collegiate is an umbrella name for 15 trusts that hold 800,000 private student loans, totaling $12 billion. More than $5 billion of that debt is in default, according to court filings.
At the center of the storm is one of the nation's largest owners of private student loans, the National Collegiate Student Loan Trusts. It is struggling to prove in court that it has the legal paperwork showing ownership of its loans, which were originally made by banks and then sold to investors. National Collegiate is an umbrella name for 15 trusts that hold 800,000 private student loans, totaling $12 billion. More than $5 billion of that debt is in default, according to court filings.
uh-oh (Score:5, Funny)
It's more complex (Score:5, Informative)
well I think that's the problem. They don't have the paper.
It's also not simply people lying to get out of loans, it's courts fed up with high pressure tactics to get payment on loans that were never made! Then when they are contested the loan companies dont' show up in court. It's the courts that are invaldating the loans for their own purposes not just because people are trying to weasle out
from the article:
“I tried to be honest,” Ms. Watson said of her court appearance. “I said, ‘Some of these loans I took out, and I’ll be responsible for them, but some I didn’t take.’”
In her defense, Ms. Watson’s lawyer seized upon what he saw as the flaws in National Collegiate’s paperwork. Judge Eddie McShan of New York City’s Civil Court in the Bronx agreed and dismissed four lawsuits against Ms. Watson. The trusts “failed to establish the chain of title” on Ms. Watson’s loans, he wrote in one ruling.
When the judge’s rulings wiped out $31,000 in debt, “it was such a relief,” Ms. Watson said. “You just feel this whole weight lifted. My mom started to cry.”
Re:It's more complex (Score:5, Insightful)
Re:It's more complex (Score:5, Interesting)
I thought you might be joking so I did a brief look. I'm not a tax accountant so it's a bit indecipherable to me this early in the morning but the IRS most definitely wants you to report it as income on the year the debt is canceled. I just can't tell if this debt cancellation is an exception to canceled debt. This looks to be a fairly brutal tax hit. The minimum that you would owe the IRS should be $3578.75 for the $31,000 and that's assuming no income (besides the debt cancellation) and the standard deduction. You'd pay 10% on $9,275 and 15% on $17,675. It definitely doesn't qualify as an exception to gross income because the debt isn't being cancelled as part of bankruptcy.
Re:It's more complex (Score:5, Insightful)
The court is saying the debt never existed, so it is not debt forgiveness. It should not be taxed unless the IRS is particularly cruel.
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The court is saying the debt never existed, so it is not debt forgiveness. It should not be taxed unless the IRS is particularly cruel.
Which means that it will be taxed then.
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No, that isn't that. The U.S. Tax Court is most definitely a court. The U.S. Tax Court is a federal trial court, established under Article I, Section 8 of the U.S. Constitution, whose jurisdiction largely extends to cases having to do with federal tax matters. Most of the cases it sees deal with the federal income tax, and it is the only forum in which a taxpayer may litigate tax matters with the U.S. Government without having paid the disputed tax in full.
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The real problem is whether the judicial case counts as a debt cancellation under the regulations.
The easy case is when a creditor says, "Ok, you're not going to be able to pay this, your debt is cancelled." The creditor writes off the debt, and the debtor receives debt cancellation income. There's even a form, the 1099-C, Cancellation of Debt, that the creditor is supposed (and under some circumstances, is required) to send to you and the IRS if they cancel a debt.
This is a harder case. The case was a fail
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Trickster owes AC $100 mil in unprovable, but bona fide, debt. AC gives up, forgives $100 mil debt, writes off $100 mil loss on income taxes, issues Trickster 1099-C. Trickster receives 1099-C, has $100 mil in cancellation of debt income. Cancellation of debt income is ordinary income, not capital gains. Unless cancelled debt falls into certain exemptions, Trickster now has a $39,556,169.95 tax bill.
There's a difference between a bona fide debt that you can't enforce because of a defect, say, in the chain o
Re:It's more complex (Score:4, Informative)
Here is an interesting data point. Last year John Oliver's Last week tonight tv show wanted to do a deep dive into collection agencies. They formed a collection agency and bought literally millions of dollars in medical debt. You would think that this debt would be handed off as thousands of pounds of paperwork or gigabytes of scanned documents.
You'd be wrong. They bought an excel spreadsheet of names, addresses, social security numbers, etc.
"Ask for proof of the debt" appears to be a valid strategy to check abuses in the collection industry.
Re:It's more complex (Score:4, Interesting)
Re:It's more complex (Score:4, Informative)
If a collection agency (Windham Associates) was after you for the debt, that (in theory) means the original entity you owed money to (RCI) has sold the debt to them. In almost all cases, especially for low-value debts, the collection agency owns the debt. This keeps the original owner's hands clean legally for the bullshit collection practices used and distances them from PR nightmares.
Assuming WA owned the debt, you sending a check to RCI after they sold the debt to WA doesn't count as you paying the debt. It counts as you giving away money to RCI and not paying your debt, which is owned by WA. WA probably decided at that point that you weren't worth the hassle. Your piece of documentation, however invalid, wasn't worth fighting in court over $200 and change. They likely got the amount they paid for your debt (less than $570) back from RCI.
Alternatively, they knew they didn't have paperwork showing they owned the debt (because it's all intentionally sloppy, bought in bulk, etc.), just like this story is talking about. So your check would have been valid payment of the debt.
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Re:uh-oh (Score:5, Insightful)
That's not wholly the issue.
There's often a difference between where the loan originates and the loan servicer. The entity that services the loans buys the debt from the original lender, which gets the original lender out of the loan for a small profit, while the servicer then collects principal and interest for their profit.
Loans may pass through several different servicers throughout their duration. Each time the loan is transferred it is the obligation of the entities in the transaction to properly document that transaction. This is typically easier with loans that are for an item that serves as collateral and has state-issued documentation upon it, like a vehicle or a property, as the act of transferring the loan requires the servicers to file with the state that transaction, but even in cases like that it can get messed up. The problems with subprime real estate and failure to maintain a chain of custody on the documentation is proof of that. When there's no item with a title or deed to serve as a state-mandated bit of ownership documentation though, it's a lot easier to lose track of all of the paperwork that proves who actually owns the loan.
It sounds like the entities that dealt with student loans bought them from the original lenders but didn't bother to properly document the transactions, and then they sold them, and that transaction was not properly documented either. Get too far from the original lender (or find that lender no longer in existence or having destroyed its own records as the completed sale may allow or mandate) and now it's basically impossible to prove anything. If a servicer presses a case in court and then has no documentation then who's to say that they ever owned the loan that they claim they have?
Lenders Hate This One Weird Trick! (Score:5, Insightful)
Re:Lenders Hate This One Weird Trick! (Score:5, Informative)
It's not bullshit. Any creditor has to be able to prove that you owe them money. it doesn't require a "special kit". It just requires standing up for yourself.
Don't trust a bill just because someone sent it to you. It could be a billing error or blatant fraud. Scam artists send out small medical bills betting on the mark being diligent enough to pay their bills but not anal enough to track everything they do.
Hospitals screw up bills more often than not.
A whole batch of mortgages were nullified in Texas because the proper paperwork was never filed with the relevant government body. The Yankee corporation in question thought they didn't have to bother. Didn't go over will with the Texas judge in question.
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Yeah, this is one of the more baffling aspects of modern American culture, especially on the right. They distrust every single thing about the government, but are happy to believe every single thing out of the mouths of large corporations and throw all their trust behind them. What makes this even less understandable is that one of those entities has a clear motive for lying to you quite a lot of the time, and the other doesn't... and many people will still put their trust behind the party that has clear
Re: Lenders Hate This One Weird Trick! (Score:5, Interesting)
You responded to a post about the most publican of republican States, where they didn't just take the word of the corporation...
Sheesh...
Re:Lenders Hate This One Weird Trick! (Score:5, Insightful)
Re:Lenders Hate This One Weird Trick! (Score:5, Insightful)
Second part of the sentence seems to contradict the first.
Re:Lenders Hate This One Weird Trick! (Score:5, Informative)
It seems the rest of the paragraph explains the contradiction.
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"nearly 1/3 of black men have been put into prison for crimes white people get a slap on the wrist for,"
Your numbers are fictional, but your point is actually valid. Sadly, how many of these black men are felons because they live in communities that cannot deal with crime, poverty, and social collapse? Don't ask the Federal government to solve this. Hold the local authorities to account.
But that is a lot to ask of people who go to sleep fearful their children will be shot dead merely by accident the next d
Re:Lenders Hate This One Weird Trick! (Score:5, Interesting)
It's not the colleges as institutions that are leftist and anarchic. It's the people being 18 years old. If we create completely different types of youth educational institutions they will come up as leftist and anarchic too, because the people attending them are.
It's the old adage: Parents don't understand how their children are at the age of 18 can be so full of anarchic and socialist ideas, because they are now in their 40ies and 50ies and have a quite conservative worldview. And they totally forget how they were at the age of 18 themselves. We hear the constant "oh the Youth". And the parents are quick to blame the colleges for that, because those are the first places the children go without constant parental supervising. Of course it's the colleges' fault that people of young age act like people of young age and people of old age forget how they were when they were at young age.
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Who is not a socialist at age 20 has no heart. Who is not a conservative at age 40 has no brain.
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Because the age and culture it was written in were different. In Europe 30 years ago, liberal meant anti-government (Margaret Thatcher called Reagan "the great liberal of our time"). Conservative meant actually conserving current society. As opposed to US now where conservative means libertarian financials with theocratic social laws, and liberal means a regulated economy with safety net and permissive social laws.
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No. You are merely incorrect. And I do not rely on media reports and bloggers of dubious reputation, but on direct observation of faculty and in classrooms from Maine to Arizona.
Colleges and universities are demonstrably dominated by Leftist thought. It's just so, and has been for a generation or more. They just are.
And this would not be a serious threat to our nation if it were 'merely' leftist thought. But it's a truly dangerous Leftist agenda at work, expressed by deep enduring hatred for wealth and acco
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well in resold debts, they usually tack on some bullshit fees for doing the hard work of changing the paperwork to be in their name and collecting it.
ie, work that they skipped doing.
and anyways, maybe it's a good business to sell fake loans to these collection agencies since they apparently don't check _actually_ if they are owed the money.
(not maybe, it is)
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I knew a guy who would change his signature every few years. If someone came up with some old agreement that he wanted out of, he would just say the signature wasn't his and produce a current example to "prove" it.
I always thought that signatures were a bad form of authentication. Relatively easy to copy, difficult to reliably verify, problematic for people with arthritis and other disabilities, and vulnerable to this kind of fraud.
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No it's a technicality, Mr. Cappy McShoutypants.
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You are not arguing that you do not owe money. What you are arguing is that you do not owe them the money.
Suppose you dutifully pay off some of this note and then a different lender that has documented proof turns up. The best thing that can happen from here is that you get your money back minus an astounding lawyer fee. Other outcomes include not getting your money back. You still owe the whole note to the real owner of your debt.
Re:Lenders Hate This One Weird Trick! (Score:5, Informative)
What about the fake bills for stuff web services (Score:3)
What about the fake bills for stuff like web services that some office secretary use to just pay with out checking them very hard.
It's time for someone else to pay the piper... (Score:4, Insightful)
Looks like the average American will have to bail out yet another greedy creditor. I wonder how big the bonuses will be this time.
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Doubtful on a one-off thing like this situation.
So perhaps the system will work as designed, the creditors took a risk by extending credit, and due to their own actions are unable to collect on the debt.
e.g. they took the risk and should take the loss for their bet. The exact thing that should have happened in the housing crash of the last decade (bail out the people who will lose their home, not the bank that booked their profit up front with no value assigned to the underlying loan).
Dang! (Score:2)
Dang! This almost makes me wish I had student loans instead of working 50 hours a week to get through college and pay as I went. It would have been a lot easier.
"deeply flawed" collection cases (Score:5, Interesting)
"deeply flawed" documentation.
I really wonder about that. I had difficulty getting a job after college, and like a lot of others my student loan went into collection. Two years after graduation, in another state, I landed a well paying job, contacted the collection agency through an old notice and made payments, eventually paying it off.
And then, about a year later, I got contacted by a collection agency (the same or a different, I don't know -- didn't keep track) that I still owed $500-something on my student loan. I was doing well at the time, so I paid it off again just to make it all go away.
Three years later, I moved to a different state and got a new job, and a collection agency *again* contacted me about my student loan, saying I still owed a little over $200. I argued vehemently that I had already paid off the damn thing twice. They got really rude over the next few weeks, called work and home at all hours, and being nasty to whomever answered. I swallowed my pride and paid it off for a third time.
That was a couple decades ago, and I haven't gotten any calls since. But here's the punchline. My most recent job required that I provide evidence of my degree. I'd never been asked this before, and looking through all my decades-old paperwork, some never opened through moves from one state to another to another, I couldn't find my diploma.
No problem, right? Contact the school, get a copy of the diploma, send it to HR.
The school had no record that I had ever attended.
Let that sink in for a moment.
So I went backwards from the student loan docs, which showed that I attended the school from year1 to year2. The school eventually had to admit that I had been a student there, but they had lost all records of that time. I got them to put that in a letter, which my work grudgingly accepted. Next time I'm not putting my education on my resume.
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Next time I'm not putting my education on my resume.
Your story was pretty interesting and a good cautionary tale to share with us, but that's not the conclusion I would advise. If you're in IT, I want to warn you that for some time now many IT jobs flat out require a college degree just to even talk to them about the opening, let alone get hired. I've worked with guys over 50 who don't have college degrees but do have decades in the field and in some cases they get sort of grandfathered in based on experience, but I have also known of one of the guys gett
Dodd-Frank II time (Score:2)
Student loans need better regulation before we have the equivalent of the mortgage meltdown for education loans.
The mortgage bubble nearly threw us into Great Depression 2.0. (Yes, I do credit Obama for saving us. GOP's "recovery" plan was too close to Hoover's for comfort.)
Student loan debt is different (Score:2)
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They were "worth" sufficient during the bubble, but it was of course a bubble.
Similarly, if the financial worth of college education dropped across the board due to recession, outsourcing, automation/AI, fraud, or a combo, the bottom could fall out on college loan repayments.
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I did some financial model implementation for a mortgage company. When we added the part about varying property values, it was about how fast they'd increase. Moreover, the models were based on cases where mortgages were never underwater, and there just wasn't the data to predict based on that.
Fucked by being responsible (Score:3)
Once again, being a responsible adult who pays their bills leaves you fucked.
I think I'm doing this adulting thing wrong.
I've got friends who've been paying on loans (Score:2, Insightful)
I'm pretty sure the majority of people reading this would like to see free college. The question is when are we gonna put our votes where our mouth
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For anyone facing collections... (Score:5, Interesting)
Re:Wow (Score:4, Funny)
Re:Wow (Score:5, Funny)
Re:Too bad. (Score:4, Insightful)
And why should education put people in debt? Educating young people is what ensures the future of a country.
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Great. How many scholarships are named after Anonymous Coward?
Even if one agrees that society should bear more of the cost of higher education, that's not a legitimate argument for not paying back a loan - did you justify holding up convenience stores because it went to pay for your attendance at Douchebag College of Illegitimate Rationalizations?
cap studen loans / imcome based pay back with (Score:5, Insightful)
cap student loans / income based pay back with say an max interest rate of 2-3% and max pay back time 20 years. And you are under X income then you pay 0.
or just have cheaper 11 or 7 come back for them as how meany banks would give someone 150K to get that PHD in medieval studies?
Re:cap studen loans / imcome based pay back with (Score:5, Insightful)
I don't disagree, but the result may be different that you expect - the availability of loans might dry up. And feel free to give money away, if you believe that's a good thing, no one's stopping you.
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Federal loans could easily be set to 2-3% since that is less than the cost of borrowing. Federal government can easily borrow an unlimited amount of money at 1-2%.
It's the banks and "middlemen" who demand more.
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The current 30 year treasury yield as of July 17, 2017 is 2.90%. And you're neglecting to account for the cost of paperwork and defaults.
Re: cap studen loans / imcome based pay back with (Score:2, Informative)
Do this to fix your country:
Tax the rich to provide education for everyone and tax inheritance agressively.
Take away power from corporations.
Cut military spendings to 1/10.
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If we cut our military spending by 90% who would be there to back and or make sure your county isn't invaded? Because right now for a majority of the world, the USA plays big brother fighting for them.
Re:cap studen loans / imcome based pay back with (Score:5, Interesting)
Well there should not be many defaults, since student loans are not secured against collateral they have been made legally much harder to discharge in bankruptcy and related proceedings/actions.
I still say the problem is student loans are even a thing. College costs so much because the have a starry eyed clientele that is by and large unfamiliar with the amount of money involved. Many may have never even had a sum on the same order of magnitude their total debt will be when they finish school if they take the loan. A large portion have never even used credit before, other than borrowing $20 from mom!
Its a very abstract concept to them. They can't rationally judge if its better to pay a little less at South Harmon Institute of Technology, or go Harmon with its nicer dormitories, better food, and amazing sports complex. The market place is completely distorted by all the easy loan money running around.
If we stopped doing federal loans, and removed the bankruptcy protections, these collateralized loans would mostly disappear form the market place. Two things would happen, collage would get cheaper, and focus on core objectives. There is no point in having a fancy school students can't afford to attend. Many people would probably delay college until they had something to borrow against. I suspect this might also have a positive effect in terms of people having a better idea of what they want out of college.
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I still say the problem is student loans are even a thing. College costs so much because the have a starry eyed clientele that is by and large unfamiliar with the amount of money involved.
Certainly the structure of the loans need addressed. A student loan should be a loan for books and tuition, and nothing else.
But how did we get here? Even back in the 1970's, there was a obsessive effort to get students and their parents in line with the concept of you were academic and going to college, or you were a piece of shit.
The ever practical but annoying shit that I am, in High School, I took both Academic major and Vocational Electronics. This got me several visits with the counselors and eve
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That's already the case though, interest rates on student loans are extremely low and payback extremely long. That's exactly the problem you're trying to avoid, it's basically "free money" for 18-25 year olds which for all intents and purposes are still teenagers with matching impulse control.
And as long as particular colleges remain government-funded status symbols, people will continue paying for it, most students do not need to go to Yale/Harvard/MIT yet the demand for more well known school is far more
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most students do not need to go to Yale/Harvard/MIT
There is a very high correlation between going to an "Ivy League" institution and significantly better future outcomes.
Looks to me like you are masking your opinion, pretending it to be what other people "need."
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Because they made an agreement! Even if we decided to make all public colleges free tomorrow it would not change the obligation of people with existing loans to pay them!
They wanted to borrow money to get something they wanted at the time and agreed to pay it back with interest. They were lent the money. They need to repay the money.
the NBA and NFL need minor leagues so that we can (Score:2)
the NBA and NFL need minor leagues so that we can cut the joke classes that student athletes take (when the team needs 40-60 hours you don't time for class)
Re:Too bad. (Score:4, Insightful)
Re:Too bad. (Score:5, Insightful)
I love how we always talk about personal responsibility and corporate responsibility, but it's always the little guy that gets hit by it. Why is it the borrowers ethical responsibility to pay the loan back, but not the owner of the loan's responsibility to actually track what people owe them? Seems to me that ethically, if you can't prove someone owes you something, then they don't owe you jack.
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"In a country that is supposedly as great as ours, all education should be free."
Public education is free in the USA. It is also worthless.
Public schools in places like DC and Chicago give high school diplomas to those that cannot even read at an 8th grade level.
I'm sorry but the facts are facts. If you want an education then you have to pay for it.
To public schools students are just boxes on a conveyor belt. They get paid based on how many boxes reach the end. They don't care if the boxes are full of k
Re:Too bad. (Score:4, Insightful)
the parents can't even "fire" the teachers by moving their children to another school because the government decided the only schools allowed are the public schools.
Citation required.
Parents can't even home school because if you aren't sending your children to a "school"
Citation required.
I'm sorry but the facts are facts. If you want an education then you have to pay for it.
Ditto. If you want public schools that provide an education, then you have to pay for it. So the next time someone tells you "it's the teacher's fault!!!!", ask them why we pay teachers so little (thus getting reducing teacher quality), and why they keep insisting on further cuts to education budgets.
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The issue is apparently validating the chain of custody of the loans if I understand correctly. This might have a big impact on loan securitization, which I have mixed feelings about. Long term it will make access to credit much more restricted, likely driving up costs. These loans have more than the principal in finance charges though, so I guess they expected to write off half of them.
Re:Too bad. (Score:5, Insightful)
Congrats to the borrowers - they got the equivalent to finding thousands or tens of thousands of dollars on the ground because the lender wasn't careful to make sure their pocket didn't have a hole in it.
Yes, the ethical thing for the borrower to do is to pay back the loan. But if there's no clear documentation for the loan, the borrower can't be sure they're paying back the right person. They could pay someone $10,000, then next day some other collector calls saying they're the actual owner of the loan and the borrower needs to come up with another $10,000 to pay them. Faced with this possibility, the most ethical thing a borrower can do is "pay back" the loan by putting it into a savings account. And when someone can prove that they're really the actual one who is owed the money, the borrower can transfer the account over to them (minus interest).
Ooh, ooh, pick me teacher (Score:5, Insightful)
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...ethical responsibility to pay the loan back, but not the owner of the loan's responsibility to actually track what people owe them? Seems to me that ethically...
Debt: The First 5000 Years [wikipedia.org] is a stimulating read, bringing in quite different point of views on debt, loan, responsibility, ethicality and so on. Quite radical. Arguable. Not a short read. Cut and paste from WP :
Debt: The First 5,000 Years is a book by anthropologist David Graeber published in 2011. It explores the historical relationship of debt with social institutions such as barter, marriage, friendship, slavery, law, religion, war and government; in short, much of the fabric of human life in society.
Re:Too bad. (Score:4, Insightful)
If you're too stupid to keep track of the money you've paid out then you deserve to lose it.
These lenders are relying on intimidation and bullying to get paid when they don't have their paperwork.
So sorry, follow the letter of the law, sucker.
Re:Too bad. (Score:5, Informative)
The issue is that the holder of the loans have been passing it around like crabs in a frat house and no one knows whose faul... errr owns the loans.
Chances are the borrowers weren't informed at every step, and even if they did communication claiming to own a loan and to pay someone else now is a classic scam.
Re:Too bad. (Score:5, Insightful)
Really, the borrower has no responsibility to track the loan, it's all on the lender?
Yes, it is all on the lender.
I make an agreement with you to pay you $1000 a month until my $100,000 debt is repaid. You sell that debt to someone else. You are responsible for making sure they have all the appropriate paperwork to take over that debt. If they sell it to someone else, they are responsible. And so on and so on and so on.
If whoever ends up with it can't prove that they are the person who is supposed to be receiving my payments, that's their fault or whoever sold them the debt--not mine. I'm not just going to pay someone who walks up and says, "Hey, you owe me money!" Once someone can prove that they are the person who is supposed to be receiving my payments, I will gladly make them.
Re:Too bad. (Score:5, Informative)
Really, the borrower has no responsibility to track the loan, it's all on the lender?
Yep. Otherwise, I as the supposed lender can demand that you start repaying that 500k loan I claim that you took out and according to you, the onus is on you to prove that there never was a loan.
Re:Too bad. (Score:4, Informative)
On the other hand, _if_ the lender can't demonstrate you owe them, couldn't it be that they no longer own the loan? What happens if you pay them and it turns out someone else bought the loan and now wants to be paid? I'm guessing there are scenarios where you'd end up paying twice.
You should pay your legitimate bills, but its reasonable to make sure you are paying the correct party to protect yourself.
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Making a loan and then keeping it on your books for the duration of its repayment period is increasingly quaint. That's one of the reasons why the ti
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Might be quaint, but some banks do still do this on home mortgages and it can be a factor in whom you take out a loan with.
My first mortgage in 2004 was with the bank that originated it / they never sold their portfolio for servicing. I never had reason to seek exception or talk to a loan officer, but the option was there.
The subsequent refinance to a lower rate and shorter term was sold/packaged and servicer replaced before the first payment was due.
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"I'd bet that's the rare exception"
In 2013, 59% of all mortgages were sold to third parties. See Chart 2: http://bipartisanpolicy.org/wp... [bipartisanpolicy.org]
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Sure, those who provided loans should have tracked things better, but that doesn't eliminate the ethical responsibility borrowers have to pay back what they agreed.
True but one issue brought up is that the lenders can't prove what the borrowers loaned so it would be impossible for them to pay back. In one case mentioned, a woman disputes some of the loans in question because she claims that she never went to a college that the lender says she did. She doesn't dispute the other loans. However, then the judge had to ask the lender to prove what she owed. And they can't.
The end result will only be to raise the cost of loans for future borrowers.
How will the cost of loans be raised for future borrowers? Interest rates are what determines the cos
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You do understand that if the lender can't tell you (and document) what you owe, how can you pay it back?
Bank: "This person owes $10,000 dollars your honor"
Borrower: "No I don't. I only owe $5,000"
Judge: "Where is the promissory note for any amounts"
Bank: "We don't have any."
Judge: "How are you going to make the defendant pay any amount of a loan for which you have no documentation? How do I know that the borrower owes you the money?"
Sorry, you don't get out of the loan just because you didn't get a decent education.
And where is this coming from? Freudian slip?
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Account for yourself, assuming you learned basic math with your education.
Re:Too bad. (Score:4, Informative)
Account for yourself
By your logic, anyone can claim that you owe them money and not have to provide any evidence. I owe student loans but not to XYZ Corp. According to you I should just pay them. Wait, ABC Corp says I owe them the money, should I pay them too. The bare minimum these companies had to do was to keep up with paperwork. Why do you make them also equally accountable? Or are you just beholden to a corporation?
, assuming you learned basic math with your education.
I learned basic math but I seem to be more versed in the law than you. You have to prove what you say in court. If you can't then the court doesn't have to believe you.
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Are you implying that it is (also) the borrower's responsibility to track sale and re-sale of the debt from corp A to corp B to corp C, and verify correct paperwork each time?
Yes, there's a moral obligation to pay your debts, but if the contract between borrower and lender can't be proven, then there's nothing to enforce.
If the borrower didn't enter the contract intending to find a loophole to skip repayment, but there's a failure on the other side to perform due diligence, then the lender can't really comp
Re:Too bad. (Score:4, Insightful)
Re:Too bad. (Score:4, Informative)
This sounds like a bunch of creditors that cannot show that the debtors owe those particular creditors those particular obligations. Ergo, the obligations cannot be assumed to be legitimate.
The borrower may owe someone, but they don't necessarily owe the plaintiff. If the original creditor isn't interested in collecting on the debt (because they've already sold it off) or helping the successor creditor fix their colossal screw-up, that's not on the debtor.
Ah, you're confusing legality and ethics. Legality relates to obligations specified by law and enforced by courts. Ethics relates to "feels," the dictates of invisible men in the sky, and anything that you can throw at a wall that advantages you at the time.
For example, ethics would say that private loans that were dischargeable in bankrputcy prior to 1998 should have remained so, and not been converted into non-dischargeable obligations by an after-the-fact change in the law. That was the bargain struck when the loans were made, right? Or is yours merely a creditor's ethics, where any discharge of a debt is the failing of a weak society rather than a penalty for creditors who fail to ensure that a debtor was credit worthy and/or a manifestation of the risk side of the risk/reward equation?
Proof required. Show me a substitute investment that is not dischargeable in bankruptcy, has an equivalent rate of return, and is virtually unregulated.
The end result will be a bunch of beneficiaries will sue a bunch of trustees responsbile for administrating the loan trusts for being incompetent idiots, and future, somewhat more competent trusts will arise to accept capital that is desperate for anyplace to go that is paying better than T-bill rates of return (2-3%).
Re:Too bad. (Score:5, Insightful)
At the same time, odds are at least some are being hit up for more than they owe, perhaps being double billed. There may even be some that actually don't owe any money. We can't tell how many because the paperwork is too screwed up to show that the loans even exist.
Since these loans were bought, it is safe to say that none of the debtors agreed to owe the current holder of the loan.
It's more interesting to pull back a level. There we see a financial industry so high on itself that it figured it didn't NEED proof of anything. Just point and say "He owes me money" and the courts would oblige. Sadly, they weren't wrong at the time. But after screwing around for 10 years soiling their own reputation at every turn, it is no longer true. Now judges want to see proof (like they should have all along).
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I think all education should be free but that is not the point here.
These people took out private loans for education. The people writing these loans were somewhat shady and they bundled the loans and sold them to investors looking to make a quick buck. They have been aggressive in collecting the loans and fees but the problem is that they don't have proper documentation that they actually own the loan.
If I had a loan that was serviced by these jerks, I'd default and when they came after me just ask them to
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This sounds like a bunch of debtors who've found a loophole ...
No, it sounds just like what's in TFS:
... because documents proving who owns the loans are missing.
You don't keep track of who owns your loans.
You can't get hold of that spaghetti shit.
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If you accept that the world is not black and white, and that some obligations are more legitimate than others, then many of these obligations may be in that grey zone approaching predatory, unconscionable, and even illegitimate.
Certainly some debtors in this pool knew exactly what they were getting into, and received good and valuable education as a result of taking on this debt, but there is a big piece of that industry that pushes people into debt they have little or no realistic chance of repaying by th
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They finally cheaped out to the point where they can't even prove they own the debt anymore. That's how
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who've found a loophole
Well, I say you owe me $300,000.00 for your student loan. So pay up!
Remember, you can't discharge your debt to me in bankruptcy, and if you fail to pay me back at the 13%+ interest rate (which the government loaned me at 1%), then the government will pay me back 100% + 13% interest and my court costs and whatever legal fees I care to claim!
Of course, you could always move to Scotland, where university is free for the asking. Or many other nations that do much the same. And remember,
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This sounds like a bunch of debtors who've found a loophole to get out of their legitimate obligations. Sure, those who provided loans should have tracked things better, but that doesn't eliminate the ethical responsibility borrowers have to pay back what they agreed. The end result will only be to raise the cost of loans for future borrowers.
Ethical responsibility? I agree there's a lack of ethical responsibility. It's on the part of the colleges and the loan companies that together have pushed college inflation at unfair and unjustified levels. If you're being beaten down by an unjust system over which you have no control, do you have an "ethical responsibility" to bow down to accept it? No, NEVER. You just survive as best you can, and if you play along with it then you do so only out of pragmatism. Signing the loan document -- "agreeing" in y
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legitimate obligations
Ha that's a laugh coming from you. You still owe me $2500. Why haven't you paid me yet. I already told you that you owe it to me. Stop trying to find a loophole out of your "legitimate obligations".
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On the other hand you could have just set up a standing order for the payment. I am travelling so can't make a scheduled known payment is the lamest excuse I have ever heard of.
https://en.wikipedia.org/wiki/... [wikipedia.org]
Though apparently in the third world that is the USA you have a system where the bank automatically mails a cheque to the specified payee (like WTF, really!!!!!!!!!). Either way travelling is no excuse for not making scheduled payments. For more than the last decade I have been able to go online with
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You were being responsible and your credit rating will show that. You do benefit.