As Paperwork Goes Missing, Billions in Private Student Loan Debts May Be Wiped Away

[mfcorey1]

http://www.msn.com/en-us/money/careersandeducation/as-paperwork-goes-missing-billions-in-private-student-loan-debts-may-be-wiped-away/ar-BBEC77x?li=BBnb7Kz&ocid=mailsignout


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

[nikibatts]

1. Good!

[Solly Mack]

2. K&R

Good

[gademocrat7]

3. K&R!

[ReformedGOPer]

4. What about the people who have been paying on time?

My DiL pays on time each month. Will she get a break?

[lostnfound]

5. If she got the double digit interest rates that these loans had, some rich bankers thank her

For her service.
Otherwise, these are not the low interest government backed student loans.

Some of these people actually may not have taken out the loan amounts the lender claimed they did. The point of this is that the records of the lenders are so bad that they don't know for sure what is actually owed.

Profit was made by the schools as well, and in some cases, the schools had made high interest loans too easy for young people to get suckered into.

[Le Gaucher]

6. No... She is screwed and will continue to get screwed for ever

Because she plays by the rules.

The only people who win are who rig/break rules and get away with it. You are certified winner, if you are rich and cheat in taxes by exploiting loop holes using a clever accountant .. or use tax havens to hide your income ...Or a deadbeat who borrows a ton of money and gets away with it.

I live in a 5 unit condo .. There is one racist Trump supporting bitch who hadnt paid maintainence in 2 years ....she drives a Mercedes coupe and a Nissan Z350 And declared bankruptcy. She got to keep her cars and the house..( she sold it to her son and lived there a cpuple years and bought it back from him) ..but the 4 of us had to eat the losses.

We got screwed because we play by the rules.


My sympathies are with students who saddled with high interest loans .. But ultimately the burden of their default will fall on people who make timely payments.

[lostnfound]

7. The rules say that the lenders are supposed to keep track of the paperwork

The rules say that the lenders are supposed to keep track of the paperwork. Two parties were in a contract, one party (the lender) did not maintain what they needed to maintain (proper records) to enforce their side of the contract.

This bank literally may not be entitled to the money it is claiming.

The burden of the default (though I'm not sure it is accurate to label these as defaults, when there is a court finding that the obligation doesn't exist) will fall on the shareholders of the bank. The bank will take it as a loss.