$5 to $12 billion in private American student loan debt may vanish
July 17, 2017 7:35 PM Subscribe
From The New York Times: many private lenders lack any paperwork proving that they own the debt. Dozens of cases have already been thrown out in students' favor for defaulting. Bonus: most of the loans went to for-profit colleges.
That's great! Read next paragraph: "the $108 billion private student loan market " - oh no.
posted by thecjm at 7:39 PM on July 17, 2017 [5 favorites]
posted by thecjm at 7:39 PM on July 17, 2017 [5 favorites]
suddenly feeling nervous about what pension funds have been investing in
posted by clew at 7:45 PM on July 17, 2017 [21 favorites]
posted by clew at 7:45 PM on July 17, 2017 [21 favorites]
$5 to $12 billion out of $108 billion... that's 4.6% to 11.1%... it's a start.
posted by oneswellfoop at 7:46 PM on July 17, 2017 [8 favorites]
posted by oneswellfoop at 7:46 PM on July 17, 2017 [8 favorites]
I read this this morning. There's some screwed up stuff here, from the predatory interest rate (double digits for a student loan?) that leads to monthly payments in the hundreds or thousands (!!!) to the aggressive debt recovery agents all the way to the lack of documentation on the creditor's end
The ass covering comments from the Private Equity guy were fun, too.
You'd think there would be a federal agency that could police this nonsense.
posted by notyou at 7:49 PM on July 17, 2017 [20 favorites]
The ass covering comments from the Private Equity guy were fun, too.
You'd think there would be a federal agency that could police this nonsense.
posted by notyou at 7:49 PM on July 17, 2017 [20 favorites]
I don't understand how banking and finance are so big and so powerful when so much of it so ineptly done. The documentation is the job, the documentation is the business. There isn't anything else. The application, the creditworthiness, the loan, the payments, the repayments, the default - none of it has any underlying physical reality, it's all paper or electronic documents and transaction logs.
Could you imagine a bakery where no one could say where flour was stored, because nobody could remember?
posted by Western Infidels at 7:58 PM on July 17, 2017 [123 favorites]
Could you imagine a bakery where no one could say where flour was stored, because nobody could remember?
posted by Western Infidels at 7:58 PM on July 17, 2017 [123 favorites]
Ruthless incompetence is the key defining characteristic of High Finance and the various types of finance that find themselves subsumed within it.
posted by aramaic at 8:03 PM on July 17, 2017 [4 favorites]
posted by aramaic at 8:03 PM on July 17, 2017 [4 favorites]
You'd think there would be a federal agency that could police this nonsense.
Hahahahaha...I certainly hope you weren't serious? Normally, I'd believe in federal oversight, and in transparency. However since the Trumpification of America...
Hooray for defaulters. Too damn bad everyone who owes a student loan doesn't default and demand free/affordable education for our future citizens.
posted by BlueHorse at 8:08 PM on July 17, 2017 [2 favorites]
Hahahahaha...I certainly hope you weren't serious? Normally, I'd believe in federal oversight, and in transparency. However since the Trumpification of America...
Hooray for defaulters. Too damn bad everyone who owes a student loan doesn't default and demand free/affordable education for our future citizens.
posted by BlueHorse at 8:08 PM on July 17, 2017 [2 favorites]
JUBILEE
posted by The Horse You Rode In On at 8:13 PM on July 17, 2017 [27 favorites]
posted by The Horse You Rode In On at 8:13 PM on July 17, 2017 [27 favorites]
I'm surprised that it's taken this long; this This American Life episode began with a story that basically asserts that a lot of collection agencies collect, or try to collect, on loans that they have no real paperwork for.
posted by Halloween Jack at 8:34 PM on July 17, 2017 [12 favorites]
posted by Halloween Jack at 8:34 PM on July 17, 2017 [12 favorites]
FTA:
Aaaaaaaaaaaaaaaggggh
posted by runcifex at 8:35 PM on July 17, 2017 [1 favorite]
The trusts [i.e. those who declare themselves owners] win many of the lawsuits they file automatically, because borrowers often do not show up to fight.[...]
Very few cases ever make it to trial, according to court records and borrowers’ lawyers. Once borrowers are sued, most either choose to settle or ignore the summons, which allows the trusts to obtain a default judgment.AAAAAAAAAGH
Aaaaaaaaaaaaaaaggggh
posted by runcifex at 8:35 PM on July 17, 2017 [1 favorite]
Say I was a student with student loan debt, and that I had creditors sending me letters. How would I find out if they had a sound legal case? How would I know if they legally owned my debt?
posted by So You're Saying These Are Pants? at 8:38 PM on July 17, 2017 [15 favorites]
posted by So You're Saying These Are Pants? at 8:38 PM on July 17, 2017 [15 favorites]
I doubt there's any way other than going to court and demanding they show their evidence, unfortunately. it boils down to what's more expensive: lawyer fees or the loan itself.
posted by Mr.Encyclopedia at 8:46 PM on July 17, 2017 [4 favorites]
posted by Mr.Encyclopedia at 8:46 PM on July 17, 2017 [4 favorites]
I read this this morning. There's some screwed up stuff here, from the predatory interest rate (double digits for a student loan?) that leads to monthly payments in the hundreds or thousands (!!!) to the aggressive debt recovery agents
I have been literally sick for a week because I know that in less than a year, I will graduate and my loans will come due. And I have no idea what to do about it.
I got a predatory loan years ago when I couldn't pay rent and I was about to be expelled from school for nonpayment. It was a $10,000 loan. When I signed the loan paperwork, their estimate was that it would cost $40,000 to pay it back. I didn't want to sign, but literally no one else would lend to me.
My current balance is about $20,500. It's been an unbearable weight for years. I get a statement every month, and every month they raise the interest by 0.125%. It's currently at 12.375% and obviously it'll be higher by the time I start paying it off. It's in deferment now, but I know that the last time I had to make a payment on it, the minimum payment was $384.82.
That's not even taking into account my federal loans, which have their own minimum payments. So now I have to choose between going to grad school right away and keeping my loans in deferment, or waiting a year and hoping I'll be able to find a job that can pay for probably $500 a month in minimum payments, despite having no job references from the past 10 years. I don't feel at all prepared to take the GRE and apply to schools, but I sure a shit don't feel prepared to pay those jackals.
I'm 31 years old, and I've been literally too sick to eat anything besides rice, toast, and pasta, because this is just unbearable. This is torture, and in a sane world these people would be seen, and treated, as unconscionable criminals. Instead, I get to be the commodity that makes some rich guy even richer, regardless of what it does to me.
posted by shapes that haunt the dusk at 8:47 PM on July 17, 2017 [40 favorites]
I have been literally sick for a week because I know that in less than a year, I will graduate and my loans will come due. And I have no idea what to do about it.
I got a predatory loan years ago when I couldn't pay rent and I was about to be expelled from school for nonpayment. It was a $10,000 loan. When I signed the loan paperwork, their estimate was that it would cost $40,000 to pay it back. I didn't want to sign, but literally no one else would lend to me.
My current balance is about $20,500. It's been an unbearable weight for years. I get a statement every month, and every month they raise the interest by 0.125%. It's currently at 12.375% and obviously it'll be higher by the time I start paying it off. It's in deferment now, but I know that the last time I had to make a payment on it, the minimum payment was $384.82.
That's not even taking into account my federal loans, which have their own minimum payments. So now I have to choose between going to grad school right away and keeping my loans in deferment, or waiting a year and hoping I'll be able to find a job that can pay for probably $500 a month in minimum payments, despite having no job references from the past 10 years. I don't feel at all prepared to take the GRE and apply to schools, but I sure a shit don't feel prepared to pay those jackals.
I'm 31 years old, and I've been literally too sick to eat anything besides rice, toast, and pasta, because this is just unbearable. This is torture, and in a sane world these people would be seen, and treated, as unconscionable criminals. Instead, I get to be the commodity that makes some rich guy even richer, regardless of what it does to me.
posted by shapes that haunt the dusk at 8:47 PM on July 17, 2017 [40 favorites]
Oh, and the aggressive debt recovery agents. My school mistakenly listed me as having graduated, and these fucks called nonstop, day and night, until I eventually answered. They would always sound so friendly on the phone: "hi, Mr. Dusk, how are you today?" I know the person on the other end of the line was just an employee, and I know they weren't personally responsible for my debt, or the financial crimes against this country, but reader, I told them how I was doing, and it wasn't great. It was not great at all, and I definitely let them know why. Then I paid them hundreds of dollars, because I had no choice.
posted by shapes that haunt the dusk at 8:51 PM on July 17, 2017 [2 favorites]
posted by shapes that haunt the dusk at 8:51 PM on July 17, 2017 [2 favorites]
So if I'm reading this right, the initial lender - the lender the student signs the contract with - immediately turns around and sells the loan to a third party, who sells it to a fourth party, who contracts a fifth party to actually administer the loan, and any of these parties has the right to amend the contract as they see fit?
So the contract that the student signs is essentially a fiction? At least with a loan shark, the thug who comes round to break your legs is from the same organisation...
I mean, I come from a country that funds higher education through a federal loan program, so I don't really comprehend private debt for education, but this situation seems completely insane!
posted by prismatic7 at 9:02 PM on July 17, 2017 [2 favorites]
So the contract that the student signs is essentially a fiction? At least with a loan shark, the thug who comes round to break your legs is from the same organisation...
I mean, I come from a country that funds higher education through a federal loan program, so I don't really comprehend private debt for education, but this situation seems completely insane!
posted by prismatic7 at 9:02 PM on July 17, 2017 [2 favorites]
I know the person on the other end of the line was just an employee, and I know they weren't personally responsible for my debt, or the financial crimes against this country
The choice of occupation, the choice of who you are willing to work for, is a moral one, however.
posted by Jimbob at 9:12 PM on July 17, 2017 [8 favorites]
The choice of occupation, the choice of who you are willing to work for, is a moral one, however.
posted by Jimbob at 9:12 PM on July 17, 2017 [8 favorites]
I don't understand how banking and finance are so big and so powerful when so much of it so ineptly done. The documentation is the job, the documentation is the business.
I can't speak to this specific case at all, but, in general, it's simpler than you'd think. If it involves an asset that requires routine collections of money, the entity who owns it will hire a company called a "servicer" to handle that administration. E.g., Ocwen, Navient, etc. The servicer usually gets a fixed fee per unit serviced, and those fees aren't terribly high. The entity paying the servicer's bills, the true customer, is not the people the servicer deals with on a day to day basis collecting money. The entity paying the bills doesn't really care how the servicer treats the people it's dealing with, so long as the money keeps coming in. The people have very little leverage to demand good treatment from the servicer, especially when the government takes little interest.
All this means that the servicer has no incentive to invest in its employees or systems. To them, every dime spent above the absolute minimum required to prevent people from seizing torches and pitchforks and descending on the call center is a dime wasted. To me, it's a wonder they require literacy. And building a company capable of handling the sometimes complex servicing tasks competently--that would be a challenge even if you were willing to spend appropriately.
So if I'm reading this right, the initial lender - the lender the student signs the contract with - immediately turns around and sells the loan to a third party, who sells it to a fourth party, who contracts a fifth party to actually administer the loan, and any of these parties has the right to amend the contract as they see fit?
Uh...you're not?
posted by praemunire at 9:13 PM on July 17, 2017 [3 favorites]
I can't speak to this specific case at all, but, in general, it's simpler than you'd think. If it involves an asset that requires routine collections of money, the entity who owns it will hire a company called a "servicer" to handle that administration. E.g., Ocwen, Navient, etc. The servicer usually gets a fixed fee per unit serviced, and those fees aren't terribly high. The entity paying the servicer's bills, the true customer, is not the people the servicer deals with on a day to day basis collecting money. The entity paying the bills doesn't really care how the servicer treats the people it's dealing with, so long as the money keeps coming in. The people have very little leverage to demand good treatment from the servicer, especially when the government takes little interest.
All this means that the servicer has no incentive to invest in its employees or systems. To them, every dime spent above the absolute minimum required to prevent people from seizing torches and pitchforks and descending on the call center is a dime wasted. To me, it's a wonder they require literacy. And building a company capable of handling the sometimes complex servicing tasks competently--that would be a challenge even if you were willing to spend appropriately.
So if I'm reading this right, the initial lender - the lender the student signs the contract with - immediately turns around and sells the loan to a third party, who sells it to a fourth party, who contracts a fifth party to actually administer the loan, and any of these parties has the right to amend the contract as they see fit?
Uh...you're not?
posted by praemunire at 9:13 PM on July 17, 2017 [3 favorites]
I didn't want to sign, but literally no one else would lend to me.
There's a bit of cognitive dissonance here. Private lenders stepped in where nobody else would, and instead of federal loans and no degree you get more loans and the degree. But somehow it's their fault that the cost of education wasn't affordable without loans? Lenders are like the TicketMaster of higher ed: they take the blame for the venue's greed.
posted by pwnguin at 9:18 PM on July 17, 2017 [3 favorites]
There's a bit of cognitive dissonance here. Private lenders stepped in where nobody else would, and instead of federal loans and no degree you get more loans and the degree. But somehow it's their fault that the cost of education wasn't affordable without loans? Lenders are like the TicketMaster of higher ed: they take the blame for the venue's greed.
posted by pwnguin at 9:18 PM on July 17, 2017 [3 favorites]
I doubt there's any way other than going to court and demanding they show their evidence, unfortunately. it boils down to what's more expensive: lawyer fees or the loan itself.
If you had Gideon v. Wainwright applying to civil cases, it would totally kill the business model for the loan collectors.
posted by jonp72 at 9:20 PM on July 17, 2017 [4 favorites]
If you had Gideon v. Wainwright applying to civil cases, it would totally kill the business model for the loan collectors.
posted by jonp72 at 9:20 PM on July 17, 2017 [4 favorites]
But somehow it's their fault that the cost of education wasn't affordable without loans?
Charging 12% when the cost of funds is, like, 1% and on loans that aren't even dischargeable in bankruptcy...they didn't do that in a fit of absent-mindedness.
posted by praemunire at 9:21 PM on July 17, 2017 [33 favorites]
Charging 12% when the cost of funds is, like, 1% and on loans that aren't even dischargeable in bankruptcy...they didn't do that in a fit of absent-mindedness.
posted by praemunire at 9:21 PM on July 17, 2017 [33 favorites]
Lenders are like the TicketMaster of higher ed
the biggest rent-seeking parasites on earth?
yeah, that about sums it up.
posted by indubitable at 9:26 PM on July 17, 2017 [20 favorites]
the biggest rent-seeking parasites on earth?
yeah, that about sums it up.
posted by indubitable at 9:26 PM on July 17, 2017 [20 favorites]
So if I'm reading this right, the initial lender - the lender the student signs the contract with - immediately turns around and sells the loan to a third party, who sells it to a fourth party, who contracts a fifth party to actually administer the loan
My mortgage has been sold and resold a ridiculous number of times, to the point that I don't understand the business model (I mean, with that many layers having taken a cut, what is left?) But the terms stay the same so it is more weird and slightly inconvenient than anything. I have wondered, though, if each new loan holder really does have all their paperwork in order. I wish there was a simple process to check, rather than the nuclear option of going to court.
posted by Dip Flash at 9:27 PM on July 17, 2017 [6 favorites]
My mortgage has been sold and resold a ridiculous number of times, to the point that I don't understand the business model (I mean, with that many layers having taken a cut, what is left?) But the terms stay the same so it is more weird and slightly inconvenient than anything. I have wondered, though, if each new loan holder really does have all their paperwork in order. I wish there was a simple process to check, rather than the nuclear option of going to court.
posted by Dip Flash at 9:27 PM on July 17, 2017 [6 favorites]
I didn't want to sign, but literally no one else would lend to me.
There's a bit of cognitive dissonance here. Private lenders stepped in where nobody else would, and instead of federal loans and no degree you get more loans and the degree. But somehow it's their fault that the cost of education wasn't affordable without loans? Lenders are like the TicketMaster of higher ed: they take the blame for the venue's greed.
Oh, for fuck's sake, the bank didn't lend to me out of the kindness of their hearts, they lent to me because I was in a desperate situation and they could take advantage of that to give me a loan with an absurdly high interest rate that should have been criminal. I was a full-time student, I had been desperately looking for a job, but couldn't get one (this was immediately after the 2008 crash), and I couldn't get federal loans because I was under 24 and FAFSA determined that my "expected family contribution" would be far greater than the $0 it actually was. My school was actually really cheap, and so was my rent, but I had been trying to get more reasonable loans for months, and I'd finally burned through all my savings (from when I actually had a job).
Of course, it never once occurred to me that if I didn't want to live with crushing debt, I could have just broken my lease and dropped out of (or been expelled from) school. Jesus Christ, why have I been angry at the bank this whole time? All these years, I've been angry about the absurdly high interest rate they hit me with, when all along it was me who signed the paperwork. Mind is blown. Talk about cognitive dissonance! I'm glad that was what you picked up on in my comment about how my predatory loan has been literally making me sick for the past week.
posted by shapes that haunt the dusk at 9:54 PM on July 17, 2017 [97 favorites]
There's a bit of cognitive dissonance here. Private lenders stepped in where nobody else would, and instead of federal loans and no degree you get more loans and the degree. But somehow it's their fault that the cost of education wasn't affordable without loans? Lenders are like the TicketMaster of higher ed: they take the blame for the venue's greed.
Oh, for fuck's sake, the bank didn't lend to me out of the kindness of their hearts, they lent to me because I was in a desperate situation and they could take advantage of that to give me a loan with an absurdly high interest rate that should have been criminal. I was a full-time student, I had been desperately looking for a job, but couldn't get one (this was immediately after the 2008 crash), and I couldn't get federal loans because I was under 24 and FAFSA determined that my "expected family contribution" would be far greater than the $0 it actually was. My school was actually really cheap, and so was my rent, but I had been trying to get more reasonable loans for months, and I'd finally burned through all my savings (from when I actually had a job).
Of course, it never once occurred to me that if I didn't want to live with crushing debt, I could have just broken my lease and dropped out of (or been expelled from) school. Jesus Christ, why have I been angry at the bank this whole time? All these years, I've been angry about the absurdly high interest rate they hit me with, when all along it was me who signed the paperwork. Mind is blown. Talk about cognitive dissonance! I'm glad that was what you picked up on in my comment about how my predatory loan has been literally making me sick for the past week.
posted by shapes that haunt the dusk at 9:54 PM on July 17, 2017 [97 favorites]
Where did I read that a lot of lenders weren't pursuing collection efforts because of the various complications associated with students loans just now? I defaulted on my Sallie Mae loans a few months ago—a significant worsening of a chronic condition caused me to drop out of school, and I have no personal income (though I am supported by my partner, so no worries, really). I tried to work with Sallie Mae, but it was hard to get through to them, and they'd offer me an adjustment in one phone call and then tell me in the next one that I must be confusing them for someone else because they simply don't do that. In the end, they offered me an "adjustment" that was, "OK, you pay the overdue payment now, and then you pay your regular payment." I was like, "I can't pay it, that's why it's overdue," and the rep was like, "Well, we can't make an adjustment if you don't have any income, because how do we know you can pay?" And I was like, "OK, well, I tried."
After this, I spoke to my debt counselor for advice, and at one point I said, "My Sallie Mae loans are about to go into default," and she said, "That can actually be a good thing. The collection agencies are much easier to work with than Sallie Mae." Given what we know about collection agencies, that's really saying something.
Here's the thing, though: before they declared me defaulted, we were getting multiple phone calls every day (we'd just put each new number on a kill list, so we never even knew about them unless we checked "missed calls" for some reason). But since they defaulted me? Not one peep from any collections-related person.
I'll hear from them eventually, I'm sure, but if they hold off another 12 months, my partner and I will be in a much better place to negotiate a settlement of some kind. It's just very interesting.
posted by Orlop at 10:02 PM on July 17, 2017 [2 favorites]
After this, I spoke to my debt counselor for advice, and at one point I said, "My Sallie Mae loans are about to go into default," and she said, "That can actually be a good thing. The collection agencies are much easier to work with than Sallie Mae." Given what we know about collection agencies, that's really saying something.
Here's the thing, though: before they declared me defaulted, we were getting multiple phone calls every day (we'd just put each new number on a kill list, so we never even knew about them unless we checked "missed calls" for some reason). But since they defaulted me? Not one peep from any collections-related person.
I'll hear from them eventually, I'm sure, but if they hold off another 12 months, my partner and I will be in a much better place to negotiate a settlement of some kind. It's just very interesting.
posted by Orlop at 10:02 PM on July 17, 2017 [2 favorites]
All these years, I've been angry about the absurdly high interest rate they hit me with, when all along it was me who signed the paperwork.
I'm sorry you're feeling bad, and the way the system works, from it's expected family contributions demanding blood from stones, to the arbitrary lending limits knee-capping students mere credit hours from graduation isn't helping. Nowhere do I recall blame you for signing, and if I did, I apologize. Borrowing is a rational, if shitty, choice, in a world where federal, state and local funding for higher ed is continually slashed to pay for tax cuts.
I just, probably through the luxury of having never taken private student loans, think criminalizing lending is a mistake. Instead we should strive to either make such loans unnecessary, or failing that, a hell of a lot more competitive and less risky for students. 4 year tuition guarantees. University towns that don't fight new construction tooth and nail. Transparent, online clearing houses for borrowing. Interest rates influenced by degree selection. Disputable or legally actionable family contribution numbers. And apparently, better record keeping.
posted by pwnguin at 10:33 PM on July 17, 2017 [3 favorites]
I'm sorry you're feeling bad, and the way the system works, from it's expected family contributions demanding blood from stones, to the arbitrary lending limits knee-capping students mere credit hours from graduation isn't helping. Nowhere do I recall blame you for signing, and if I did, I apologize. Borrowing is a rational, if shitty, choice, in a world where federal, state and local funding for higher ed is continually slashed to pay for tax cuts.
I just, probably through the luxury of having never taken private student loans, think criminalizing lending is a mistake. Instead we should strive to either make such loans unnecessary, or failing that, a hell of a lot more competitive and less risky for students. 4 year tuition guarantees. University towns that don't fight new construction tooth and nail. Transparent, online clearing houses for borrowing. Interest rates influenced by degree selection. Disputable or legally actionable family contribution numbers. And apparently, better record keeping.
posted by pwnguin at 10:33 PM on July 17, 2017 [3 favorites]
"Interest rates influenced by degree selection."
wat?
posted by el io at 10:44 PM on July 17, 2017 [5 favorites]
wat?
posted by el io at 10:44 PM on July 17, 2017 [5 favorites]
> I just, probably through the luxury of having never taken private student loans,
Me too, since I came of college-age just under the wire when this started to be A Thing...
> and the way the system works, from it's expected family contributions demanding blood from stones
No, stop. We made this system - us, people - and it is not required anywhere that "the system" be made in such a way as to both appeal to and penalize the most needy/naive/desperate/ignorant. I came of college-age when there were no wreck-your-whole-fucking-life private student loans available and I don't think anyone who was unfortunate enough to be born after me should have to suffer to tortures of the shitty system that sprang up.
Criminalizing lending is perfectly cromulent if you (the lender) are so fucking incompetent you can't keep records well enough to keep you out of fraud territory. Can't be arsed to use [some tiny percentage] of your potential profits to pay people to keep your records? Not my fucking problem, bye!
posted by rtha at 11:29 PM on July 17, 2017 [43 favorites]
Me too, since I came of college-age just under the wire when this started to be A Thing...
> and the way the system works, from it's expected family contributions demanding blood from stones
No, stop. We made this system - us, people - and it is not required anywhere that "the system" be made in such a way as to both appeal to and penalize the most needy/naive/desperate/ignorant. I came of college-age when there were no wreck-your-whole-fucking-life private student loans available and I don't think anyone who was unfortunate enough to be born after me should have to suffer to tortures of the shitty system that sprang up.
Criminalizing lending is perfectly cromulent if you (the lender) are so fucking incompetent you can't keep records well enough to keep you out of fraud territory. Can't be arsed to use [some tiny percentage] of your potential profits to pay people to keep your records? Not my fucking problem, bye!
posted by rtha at 11:29 PM on July 17, 2017 [43 favorites]
Nowhere do I recall blame you for signing, and if I did, I apologize. Borrowing is a rational, if shitty, choice, in a world where federal, state and local funding for higher ed is continually slashed to pay for tax cuts.
Hey, look, I'm sorry to go off on you. As you might have guessed, I've been a little on edge lately. And anyway, I have been pretty sick (I couldn't stomach much today), but I also forgot that I bought ice cream last night, so I shouldn't be all "I've eaten naught but thin gruel" to get my point across.
I'm not against loans in principle, but I am in favor of criminalizing loans that create an unreasonable burden. In my case, you're right, the loan did give me the money that I needed, but the bank should never have been able to offer those terms. That loan was designed to take advantage of a needy, desperate person, and by their own estimates, I was expected to pay back 400% of what was lent to me. I don't disagree that the current system of paying for higher education is horrible, but I also think it's morally indefensible to bleed people dry like that. And, as praemunire pointed out, it's especially reprehensible that they could do this with a loan that can't be discharged through bankruptcy. I'm stuck with this until I pay it off or die. That's a burden, to say the last.
I can't hypothesize about what I would have done if the terms of that had loan been, as I wish, illegal. Maybe there would have been no loans whatsoever, and I would have been forced to drop out and break my lease. Maybe I would have been in a position to negotiate (unlikely). Who knows. I've had plenty of time to come to terms with the role that I played in getting myself into this mess. What infuriates me is the fact that there was nothing to protect me, the consumer, from financial predation. In an ideal world, our entire education system wouldn't force people into debt in the first place (it's not like I'm overjoyed about my Stafford loans, either), but short of that, the least I could wish for is some basic regulation to stop people like me from coming to so much harm. Believe me, this kind of debt can consume a person's life.
posted by shapes that haunt the dusk at 12:48 AM on July 18, 2017 [8 favorites]
Hey, look, I'm sorry to go off on you. As you might have guessed, I've been a little on edge lately. And anyway, I have been pretty sick (I couldn't stomach much today), but I also forgot that I bought ice cream last night, so I shouldn't be all "I've eaten naught but thin gruel" to get my point across.
I'm not against loans in principle, but I am in favor of criminalizing loans that create an unreasonable burden. In my case, you're right, the loan did give me the money that I needed, but the bank should never have been able to offer those terms. That loan was designed to take advantage of a needy, desperate person, and by their own estimates, I was expected to pay back 400% of what was lent to me. I don't disagree that the current system of paying for higher education is horrible, but I also think it's morally indefensible to bleed people dry like that. And, as praemunire pointed out, it's especially reprehensible that they could do this with a loan that can't be discharged through bankruptcy. I'm stuck with this until I pay it off or die. That's a burden, to say the last.
I can't hypothesize about what I would have done if the terms of that had loan been, as I wish, illegal. Maybe there would have been no loans whatsoever, and I would have been forced to drop out and break my lease. Maybe I would have been in a position to negotiate (unlikely). Who knows. I've had plenty of time to come to terms with the role that I played in getting myself into this mess. What infuriates me is the fact that there was nothing to protect me, the consumer, from financial predation. In an ideal world, our entire education system wouldn't force people into debt in the first place (it's not like I'm overjoyed about my Stafford loans, either), but short of that, the least I could wish for is some basic regulation to stop people like me from coming to so much harm. Believe me, this kind of debt can consume a person's life.
posted by shapes that haunt the dusk at 12:48 AM on July 18, 2017 [8 favorites]
I get some of you are happy at hearing this. But consider the MERS issue in housing where a transfer of loans and then not paying the county the registration fee everytime the loan was sold (should have) resulted in a disconnect of the loan owed from the property such that while you might still owe the mortgage amount that loan is no longer backed by the property. Such a disconnect (should) result in you being able to declare bankruptcy and keep the home free and clear as the recourse of getting the home from you no longer is an option due to the disconnect. Yet, how often is this happening that "we" know about?
Now consider lawyers are considered to 'speak the truth' to a Judge and so you showing the rat bastards are rat bastards is an uphill climb. (note how many people and years the behavior went on before someone stepped in)
If you opt to go the legal route on getting the debt dismissed - go read USC 1640-1692 (Memory says that is TILA/FDCPA) Read your state (and fed) rules on filing and look to plagiarize the work of people who've successfully argued the issues. Spend some time at the local law college on their lexus/nexus connection after reading up on scholar.google.com. Be ready for a multi-year fight. Then consider:
Imagine this process is a game of baseball. Now you can get the rule book, read the rules and ask them to be applied. Most pro-se's walk in thinking they understand the rules of baseball from inference of watching the game and their personal understanding of human kinesthetics and physics. If you've not read the rules you will get your ass handed to you by people who have in front of the umpire who has also read the rules.
posted by rough ashlar at 2:19 AM on July 18, 2017 [2 favorites]
Now consider lawyers are considered to 'speak the truth' to a Judge and so you showing the rat bastards are rat bastards is an uphill climb. (note how many people and years the behavior went on before someone stepped in)
If you opt to go the legal route on getting the debt dismissed - go read USC 1640-1692 (Memory says that is TILA/FDCPA) Read your state (and fed) rules on filing and look to plagiarize the work of people who've successfully argued the issues. Spend some time at the local law college on their lexus/nexus connection after reading up on scholar.google.com. Be ready for a multi-year fight. Then consider:
Imagine this process is a game of baseball. Now you can get the rule book, read the rules and ask them to be applied. Most pro-se's walk in thinking they understand the rules of baseball from inference of watching the game and their personal understanding of human kinesthetics and physics. If you've not read the rules you will get your ass handed to you by people who have in front of the umpire who has also read the rules.
posted by rough ashlar at 2:19 AM on July 18, 2017 [2 favorites]
rather than the nuclear option of going to court.
But that is the hope - you don't want the conflict AND you don't want to walk into a fight that you know isn't going to be fair no matter how much the banners and statues outside the battle arena state "this will be a fair fight".
There is a reason BLM has a position of 'you can't get justice'. Because you can't. Mostly.
(I say mostly because I can point to a pro-se in a 3 misdemeanor case who was acquitted. It helped the Dean of Students who accused him of assault recanted his claim. So he got a just outcome at that point...ignoring the 1.5 years of time he had to spend on the case. But the Chief Judge delayed the 7 misdemeanor claim the student made VS the Dean till the statue of limitations ran. Thus showing a lack of justice.)
posted by rough ashlar at 2:30 AM on July 18, 2017
But that is the hope - you don't want the conflict AND you don't want to walk into a fight that you know isn't going to be fair no matter how much the banners and statues outside the battle arena state "this will be a fair fight".
There is a reason BLM has a position of 'you can't get justice'. Because you can't. Mostly.
(I say mostly because I can point to a pro-se in a 3 misdemeanor case who was acquitted. It helped the Dean of Students who accused him of assault recanted his claim. So he got a just outcome at that point...ignoring the 1.5 years of time he had to spend on the case. But the Chief Judge delayed the 7 misdemeanor claim the student made VS the Dean till the statue of limitations ran. Thus showing a lack of justice.)
posted by rough ashlar at 2:30 AM on July 18, 2017
"a lot of collection agencies collect, or try to collect, on loans that they have no real paperwork for."
This is true all over!
A few years back my old mobile phone provider sold a spreadsheet of supposed debts to a collection firm.
Problem was that these were not actually debts.
I was on that list, but also had proof that I had paid everything that needed paid (thanks, obsessive document scanning and hoarding!).
So the first debt collection agency turned up and demand my £55 debt paid, and I responded with an aggressive pile of paperwork proving that there was no debt.
Then a different agency demanded I pay.
Again, I sent the form letter.
Every time, another agency there'd be threats that their "collection agents" may be calling to discuss the issue with me in person (They do not, in fact, have such staff and it's illegal to even remotely threaten that) or that if I paid now I could pay only half price.
Then another agency, and so on until I got a letter from the first one again!
So I drafted letters stating not only the details of the alleged debts but that it is illegal for them to attempt to reclaim debts that they don't know for sure are outstanding and furthermore that I could trace the line of purchase between each company and that it was illegal to sell debts which they could not prove were outstanding, and that they had in fact provably done that.
I haven't heard from them since.
But still, that was years of nuisance and hours of effort researching and drafting these letters over a non-existent debt.
So, in summary, debt collectors are a massive scam (in the UK) who will send threatening RED LETTERS about heavies coming to your door but have very limited rights (if any) and who routinely breach the laws which regulate them.
They know that (in general) if you have ended up in their sights, with defaulted debts you probably are vulnerable and with very few spare spoons and a big red letter is going to rattle you into paying, even if you don't need to.
posted by Just this guy, y'know at 4:11 AM on July 18, 2017 [5 favorites]
This is true all over!
A few years back my old mobile phone provider sold a spreadsheet of supposed debts to a collection firm.
Problem was that these were not actually debts.
I was on that list, but also had proof that I had paid everything that needed paid (thanks, obsessive document scanning and hoarding!).
So the first debt collection agency turned up and demand my £55 debt paid, and I responded with an aggressive pile of paperwork proving that there was no debt.
Then a different agency demanded I pay.
Again, I sent the form letter.
Every time, another agency there'd be threats that their "collection agents" may be calling to discuss the issue with me in person (They do not, in fact, have such staff and it's illegal to even remotely threaten that) or that if I paid now I could pay only half price.
Then another agency, and so on until I got a letter from the first one again!
So I drafted letters stating not only the details of the alleged debts but that it is illegal for them to attempt to reclaim debts that they don't know for sure are outstanding and furthermore that I could trace the line of purchase between each company and that it was illegal to sell debts which they could not prove were outstanding, and that they had in fact provably done that.
I haven't heard from them since.
But still, that was years of nuisance and hours of effort researching and drafting these letters over a non-existent debt.
So, in summary, debt collectors are a massive scam (in the UK) who will send threatening RED LETTERS about heavies coming to your door but have very limited rights (if any) and who routinely breach the laws which regulate them.
They know that (in general) if you have ended up in their sights, with defaulted debts you probably are vulnerable and with very few spare spoons and a big red letter is going to rattle you into paying, even if you don't need to.
posted by Just this guy, y'know at 4:11 AM on July 18, 2017 [5 favorites]
Honestly, that's better odds than Powerball...
posted by Nanukthedog at 5:13 AM on July 18, 2017 [1 favorite]
posted by Nanukthedog at 5:13 AM on July 18, 2017 [1 favorite]
When I read stories about this I think about how I lucked out getting a federal loan with extremely low interest rates despite attending one of those scummy for-profit colleges when I didn't know any better. The admissions procedure for these places is a slip-n-slide.
posted by cellphone at 6:08 AM on July 18, 2017 [1 favorite]
posted by cellphone at 6:08 AM on July 18, 2017 [1 favorite]
We are going to need to come up with a better system. The college debt bubble has been rapidly growing, becoming more dangerous [Financial Times link, may be paywalled, if so access through Google], and is not sustainable.
posted by jazzbaby at 6:35 AM on July 18, 2017 [1 favorite]
posted by jazzbaby at 6:35 AM on July 18, 2017 [1 favorite]
The application, the creditworthiness, the loan, the payments, the repayments, the default - none of it has any underlying physical reality, it's all paper or electronic documents and transaction logs.
Finance is about figuring out economic rights. When that's done, it's turned over to the lawyers to deal with the physical reality - pieces of paper on which those rights are memorialized and rendered binding. And the lawyer turns it over to the junior associate, who screws something up, and thence the issues.
Such a disconnect (should) result in you being able to declare bankruptcy and keep the home free and clear as the recourse of getting the home from you no longer is an option due to the disconnect. Yet, how often is this happening that "we" know about?
That was, fundamentally, a paperwork problem. Once banks figured out the best way to fix the paperwork problem (more paperwork: new assignments and so forth), the issue went away in large part. Mortgages aren't legal magic; they're rights incident to debt ownership. The rights don't go away just because a signature was missed.
posted by jpe at 7:25 AM on July 18, 2017
Finance is about figuring out economic rights. When that's done, it's turned over to the lawyers to deal with the physical reality - pieces of paper on which those rights are memorialized and rendered binding. And the lawyer turns it over to the junior associate, who screws something up, and thence the issues.
Such a disconnect (should) result in you being able to declare bankruptcy and keep the home free and clear as the recourse of getting the home from you no longer is an option due to the disconnect. Yet, how often is this happening that "we" know about?
That was, fundamentally, a paperwork problem. Once banks figured out the best way to fix the paperwork problem (more paperwork: new assignments and so forth), the issue went away in large part. Mortgages aren't legal magic; they're rights incident to debt ownership. The rights don't go away just because a signature was missed.
posted by jpe at 7:25 AM on July 18, 2017
The rights don't go away just because a signature was missed.
In the MERS case - the signatures weren't missed. They were trying to avoid a fee from the County Register of Deeds every time a mortgage was resold.
Someone V Katz in the late 1800's (1890ish is my memory) is starting caselaw about separating a mortgage from the loan as I remember.
A paperwork check to do - compare your payments to the HUD1 statement. If they don't match you might be able to make claim of fraud. Get that trebled and claim the fraud was ment to run over 30 years and you might be able to push that to 100k or more.
We are going to need to come up with a better system. The college debt bubble has been rapidly growing,
And when AI comes for the college educated and owing that debt - what then? CBS claims 1/2 and then 1/4 of jobs going poof. That will "trickle up".
posted by rough ashlar at 8:09 AM on July 18, 2017
In the MERS case - the signatures weren't missed. They were trying to avoid a fee from the County Register of Deeds every time a mortgage was resold.
Someone V Katz in the late 1800's (1890ish is my memory) is starting caselaw about separating a mortgage from the loan as I remember.
A paperwork check to do - compare your payments to the HUD1 statement. If they don't match you might be able to make claim of fraud. Get that trebled and claim the fraud was ment to run over 30 years and you might be able to push that to 100k or more.
We are going to need to come up with a better system. The college debt bubble has been rapidly growing,
And when AI comes for the college educated and owing that debt - what then? CBS claims 1/2 and then 1/4 of jobs going poof. That will "trickle up".
posted by rough ashlar at 8:09 AM on July 18, 2017
I opened this with the hope that I was going to find out that part of my debt was about to vanish, but alas, my creditors haven't been selling it, they're just going to sit on me until I die.
I'm thrilled for the people who are getting out from under their student debt. Fly and be free! Get the good beans and rice!
posted by bile and syntax at 8:24 AM on July 18, 2017 [7 favorites]
I'm thrilled for the people who are getting out from under their student debt. Fly and be free! Get the good beans and rice!
posted by bile and syntax at 8:24 AM on July 18, 2017 [7 favorites]
And the lawyer turns it over to the junior associate, who screws something up, and thence the issues.
Nope, this is not a result of drafting error (which, by the way, there is no excuse for at the rates the partners charge). As I said above, this is (speaking generally, and historically, not about this individual case) a systematic refusal by the companies hired to do the administrative work to spend the money required to do it properly because it would cut into their profits, abetted by the asset-holders' indifference.
posted by praemunire at 9:26 AM on July 18, 2017 [4 favorites]
Nope, this is not a result of drafting error (which, by the way, there is no excuse for at the rates the partners charge). As I said above, this is (speaking generally, and historically, not about this individual case) a systematic refusal by the companies hired to do the administrative work to spend the money required to do it properly because it would cut into their profits, abetted by the asset-holders' indifference.
posted by praemunire at 9:26 AM on July 18, 2017 [4 favorites]
The real problem in my mind is that the rules were changed in 2005 in a give-away to financial institutions by explicitly telling them that they could go ahead and make loans without even a minimal amount of due diligence. Yet one more way that 'privatization' has meant private profits at collective expense. Simple repeal of this change (or even better, the whole mess of bankruptcy related student loan laws) would quite quickly course correct a lot. Of course, there would suddenly be a college 'affordability crisis' but it would remove the lifetime of punishment for a decision made in desperation at age 20 aspect of things.
posted by meinvt at 10:28 AM on July 18, 2017 [4 favorites]
posted by meinvt at 10:28 AM on July 18, 2017 [4 favorites]
Just stopped in to say "fuck US Bank into the middle of next year"
posted by gottabefunky at 1:25 PM on July 18, 2017 [2 favorites]
posted by gottabefunky at 1:25 PM on July 18, 2017 [2 favorites]
focusing on the lenders vs the borrowers dispute leads us down the contentious choice of either leaving borrowers to twist in the wind or limiting the availability of loans. this is the old payday lender debate, i.e., are people who need cash better off with or without loan sharks. i am inclined to regulate, but maybe there's another way to look at it:
the institutions who get paid up front are the schools. maybe one solution is to bar schools from receiving borrowed funds as tuition (or at least funds obtained via high interest loans) unless they can pass a high bar for quality and job placement. that way, there wont be lenders refusing to lend or charging high interest rates, there will just be fewer Trump U. style moneypit schools permitted to take the money. those students who have the cash to attend such schools without taking loans can still do so, because we as a society should be less concerned about rich people getting taken for a ride.
this would never actually happen, but it wouldnt be all that radical if it did. there are plenty of fully private transactions that are barred by law for public policy reasons, like taking out life insurance on someone else, selling your organs for profit, inserting unconscionable clauses in contracts of adhesion, noncompete agreements (in certain states), etc...
posted by wibari at 4:40 PM on July 18, 2017 [2 favorites]
the institutions who get paid up front are the schools. maybe one solution is to bar schools from receiving borrowed funds as tuition (or at least funds obtained via high interest loans) unless they can pass a high bar for quality and job placement. that way, there wont be lenders refusing to lend or charging high interest rates, there will just be fewer Trump U. style moneypit schools permitted to take the money. those students who have the cash to attend such schools without taking loans can still do so, because we as a society should be less concerned about rich people getting taken for a ride.
this would never actually happen, but it wouldnt be all that radical if it did. there are plenty of fully private transactions that are barred by law for public policy reasons, like taking out life insurance on someone else, selling your organs for profit, inserting unconscionable clauses in contracts of adhesion, noncompete agreements (in certain states), etc...
posted by wibari at 4:40 PM on July 18, 2017 [2 favorites]
or you could address the conditions that lead to people taking out payday loans/student loans.
posted by indubitable at 5:07 PM on July 18, 2017 [3 favorites]
posted by indubitable at 5:07 PM on July 18, 2017 [3 favorites]
the institutions who get paid up front are the schools. maybe one solution is to bar schools from receiving borrowed funds as tuition (or at least funds obtained via high interest loans) unless they can pass a high bar for quality and job placement.
Well, this is why you should only go to a regionally (not nationally) accredited school, because job placement and rate of default factor into the accreditation. You can't use federal loans (and sometimes state financial aid) to pay tuition at unaccredited schools.
posted by AFABulous at 8:10 PM on July 18, 2017 [2 favorites]
Well, this is why you should only go to a regionally (not nationally) accredited school, because job placement and rate of default factor into the accreditation. You can't use federal loans (and sometimes state financial aid) to pay tuition at unaccredited schools.
posted by AFABulous at 8:10 PM on July 18, 2017 [2 favorites]
...they lent to me because I was in a desperate situation and they could take advantage of that to give me a loan with an absurdly high interest rate...
So you're saying that they were able to charge a higher price because of high demand for their product? I'm not trying to flippant or dismissive but that's what's happening. The interest rate is the price of the product and every company charges the highest price they can get people to pay at a given level of production. It's not a moral decision at all, they're not charging you a higher rate because they don't like you or think it's what you deserve, they charge it because they can. They charge that rate because, for borrowers with your credit history and other relevant data, no one else is willing to charge a lower rate. If there were, you would have gotten your loan there.
I mean, shitty lenders are shitty and if this was a shitty lender then you absolutely should feel animus towards that lender. A high interest rate, in and of itself, is not evidence of a shitty lender. Either way, you'll want to reserve plenty of that animus for all of the other parties that influence that rate. If we had better elementary and high-school education, fewer people would need to go to college and if we had more and better jobs being created there would be less of a de facto requirement for a 4-year degree to get a job which would lower the demand for a college degree. With fewer borrowers, there would be less demand and more Federally backed funds available for people who's situation looks like yours. And, with less demand for college degrees, you could expect the cost of tuition to drop too. I'm sure we can find plenty of other parties to be mad at but the government (and I wouldn't be at all surprised to find the GOP to be mostly the root of that problem) but I think the government, more than any other party with any influence over the situation, is responsible for bringing some morality to the situation by encouraging incentives that make the best outcomes for society the most profitable outcomes.
It's unfair to make your lender the sole focus of your anger and frustration and let the other jerks in the situation off the hook.
The choice of occupation, the choice of who you are willing to work for, is a moral one, however.
Working at a debt collection agency is a soul crushing job with crazy high turnover. Call center jobs in general are just shitty jobs. Basically no one who has that job likes it and everyone would likely (and often do) take a different job doing something else even if it doesn't pay quite as well. And like, in general, it's a bad idea to blame line level employees for anything the company or the industry does and forces them to do for their meager wages.
The entity paying the bills doesn't really care how the servicer treats the people it's dealing with, so long as the money keeps coming in.
As you might guess, this is a spectrum. The bank I work for cares about this and cares a LOT. We have a VERY detailed and rigorous third party risk management system in place and we thoroughly test every process regularly (among other things, I also do QA over the QA process). How the 3rd parties that we contract with treat customers is VERY important to the organization. Problems that run afoul of the law get top priority but anything that could negatively affect the bank's reputation is a close 2nd. What freaks me out is that I feel like the bank I for is on the far end of the "good" side of the spectrum but I really wish we represented the midpoint. If the average bank ran as tight a ship as my employer does, we'd have a LOT less to worry about with our financial systems and probably more effective and cheaper government oversight in the bargain.
This complex web of companies actually makes perfect sense from the company's end. It's simply companies specializing in a specific aspect of producing and servicing a product. The servicing company has chosen to specialize in servicing loans but they're not debt collectors and they don't want to be, they're good at servicing so they'll hire someone to collect the debt. The debt collector has no interest in servicing or owning debt, they've specialized in debt collection and have no interest in any other part of the process. It's just companies getting good at one specific thing and correctly calculating that it's more profitable for them to be good at that one thing than to try to build out all the other parts they'd need.
posted by VTX at 8:48 AM on July 19, 2017 [1 favorite]
So you're saying that they were able to charge a higher price because of high demand for their product? I'm not trying to flippant or dismissive but that's what's happening. The interest rate is the price of the product and every company charges the highest price they can get people to pay at a given level of production. It's not a moral decision at all, they're not charging you a higher rate because they don't like you or think it's what you deserve, they charge it because they can. They charge that rate because, for borrowers with your credit history and other relevant data, no one else is willing to charge a lower rate. If there were, you would have gotten your loan there.
I mean, shitty lenders are shitty and if this was a shitty lender then you absolutely should feel animus towards that lender. A high interest rate, in and of itself, is not evidence of a shitty lender. Either way, you'll want to reserve plenty of that animus for all of the other parties that influence that rate. If we had better elementary and high-school education, fewer people would need to go to college and if we had more and better jobs being created there would be less of a de facto requirement for a 4-year degree to get a job which would lower the demand for a college degree. With fewer borrowers, there would be less demand and more Federally backed funds available for people who's situation looks like yours. And, with less demand for college degrees, you could expect the cost of tuition to drop too. I'm sure we can find plenty of other parties to be mad at but the government (and I wouldn't be at all surprised to find the GOP to be mostly the root of that problem) but I think the government, more than any other party with any influence over the situation, is responsible for bringing some morality to the situation by encouraging incentives that make the best outcomes for society the most profitable outcomes.
It's unfair to make your lender the sole focus of your anger and frustration and let the other jerks in the situation off the hook.
The choice of occupation, the choice of who you are willing to work for, is a moral one, however.
Working at a debt collection agency is a soul crushing job with crazy high turnover. Call center jobs in general are just shitty jobs. Basically no one who has that job likes it and everyone would likely (and often do) take a different job doing something else even if it doesn't pay quite as well. And like, in general, it's a bad idea to blame line level employees for anything the company or the industry does and forces them to do for their meager wages.
The entity paying the bills doesn't really care how the servicer treats the people it's dealing with, so long as the money keeps coming in.
As you might guess, this is a spectrum. The bank I work for cares about this and cares a LOT. We have a VERY detailed and rigorous third party risk management system in place and we thoroughly test every process regularly (among other things, I also do QA over the QA process). How the 3rd parties that we contract with treat customers is VERY important to the organization. Problems that run afoul of the law get top priority but anything that could negatively affect the bank's reputation is a close 2nd. What freaks me out is that I feel like the bank I for is on the far end of the "good" side of the spectrum but I really wish we represented the midpoint. If the average bank ran as tight a ship as my employer does, we'd have a LOT less to worry about with our financial systems and probably more effective and cheaper government oversight in the bargain.
This complex web of companies actually makes perfect sense from the company's end. It's simply companies specializing in a specific aspect of producing and servicing a product. The servicing company has chosen to specialize in servicing loans but they're not debt collectors and they don't want to be, they're good at servicing so they'll hire someone to collect the debt. The debt collector has no interest in servicing or owning debt, they've specialized in debt collection and have no interest in any other part of the process. It's just companies getting good at one specific thing and correctly calculating that it's more profitable for them to be good at that one thing than to try to build out all the other parts they'd need.
posted by VTX at 8:48 AM on July 19, 2017 [1 favorite]
The MERS thing is a bit of a distractor here, beyond the common link as types of "bad paper" in which the creditor knows they can't actually meet their burden of proof if they sue, or are barred by statute or by laches, and the aggressive/abusive tactics of servicers and collectors involved. And possibly in that private educational loans have become another shitty way to find a use for the capital fleeing subprime. Similarly, subprime auto loans which are being packaged up and sold upstream, and then turned over to similar servicers.(I believe I've seen it discussed on MeFi.)
Mortgages aren't legal magic; they're rights incident to debt ownership. The rights don't go away just because a signature was missed
The specifics of mortgage law and property recording involved in robosigning were directly linked to the machinery of the whole subprime securitization setup and its meltdown. The system was a mess and the problems were obvious once the curtain was drawn back. The applicable legal principles of property and finance in mortgage lending, specifically those regarding foreclosure and transfer of debt instruments, predate electronic transactions, as do the problems or excesses they protect against. So, yes, missing paperwork can be fatal due to the simple burden of proof, or recording rules. Or specific rules regarding splitting the note from the deed, the transfer of interests and the procedures in foreclosure. All of which were eminently foreseeable.
And furthermore, it can be possible to shelter a residence in bankruptcy, there are anti-deficiency rules in foreclosure, one-action rules, and potentially junior lien stripping etc.
Student loans are like 180 degrees from that, or from other consumer loans -- there are more protections for the lender than the borrower. Bankruptcy isn't a threat. The private lender that knowingly signed you up for that ridiculous loan after your Federal eligibility dried up isn't in a junior position that gets wiped out if you default on your earlier loans. (Although every so often you hear about someone winning on an unconsionability defense.)
And in default they don't have to go through the trouble of actually evicting the borrower, taking possession of a house and the land it sits on, repairing it or maintaining it, paying taxes on it, and reselling it at a potential loss. Their motivation to collect is completely detached from the market value or earnings outcome of the education they financed. They can just haunt you, forever, with the help of the government.
posted by snuffleupagus at 2:44 AM on July 20, 2017 [1 favorite]
Mortgages aren't legal magic; they're rights incident to debt ownership. The rights don't go away just because a signature was missed
The specifics of mortgage law and property recording involved in robosigning were directly linked to the machinery of the whole subprime securitization setup and its meltdown. The system was a mess and the problems were obvious once the curtain was drawn back. The applicable legal principles of property and finance in mortgage lending, specifically those regarding foreclosure and transfer of debt instruments, predate electronic transactions, as do the problems or excesses they protect against. So, yes, missing paperwork can be fatal due to the simple burden of proof, or recording rules. Or specific rules regarding splitting the note from the deed, the transfer of interests and the procedures in foreclosure. All of which were eminently foreseeable.
And furthermore, it can be possible to shelter a residence in bankruptcy, there are anti-deficiency rules in foreclosure, one-action rules, and potentially junior lien stripping etc.
Student loans are like 180 degrees from that, or from other consumer loans -- there are more protections for the lender than the borrower. Bankruptcy isn't a threat. The private lender that knowingly signed you up for that ridiculous loan after your Federal eligibility dried up isn't in a junior position that gets wiped out if you default on your earlier loans. (Although every so often you hear about someone winning on an unconsionability defense.)
And in default they don't have to go through the trouble of actually evicting the borrower, taking possession of a house and the land it sits on, repairing it or maintaining it, paying taxes on it, and reselling it at a potential loss. Their motivation to collect is completely detached from the market value or earnings outcome of the education they financed. They can just haunt you, forever, with the help of the government.
posted by snuffleupagus at 2:44 AM on July 20, 2017 [1 favorite]
It's unfair to make your lender the sole focus of your anger and frustration and let the other jerks in the situation off the hook.
You may not realize this, but that statement is incredibly insulting. It assumes, first off, that it never occurred to me that there were a ton of responsible parties, including, obviously, myself. It presumes that I never realized that gosh, if only college were less expensive, maybe this wouldn't have happened.
What's especially insulting is that it presumes to tell me, the person who described at some length the enormous emotional burden of having this kind of loan, what I should and should not be angry about, because it's not fair for me to be as angry as I am. Do you know how infuriating it is to use the word "unfair" like that, as if the real harm here is for me to be too angry at the bank that fucked my life pretty hard? It's perfectly fair for the bank to have charged a high interest rate, because any rate the market charges is, by definition, fair. But no, what's unfair is to be mad about it. That is just unreasonable.
It is like telling someone who has been robbed blind that it's not fair to be so angry at the robber when, if you think about it, if the economy were better and if government had a stronger social safety net, there wouldn't have been any incentive to rob you blind. You know, sure you were robbed and they got away with it, and sure it was degrading and financially ruinous, but don't be too angry at them for it. That would just be unfair.
I've never believed anyone did this to me to punish me. I'd probably feel better about it if they had. Someone, somewhere signed off on this knowing it was a huge burden, but I'm sure it was totally impersonal. I call it a predatory loan because it took advantage of my financial situation to weigh me down with inescapable debt, but I've never believed that they were cackling with glee as they did it. I was just another figure on a balance sheet somewhere. And you know, it's actually pretty dehumanizing to know that the huge weight you bear really means nothing to anyone but you.
posted by shapes that haunt the dusk at 7:33 AM on July 20, 2017 [4 favorites]
You may not realize this, but that statement is incredibly insulting. It assumes, first off, that it never occurred to me that there were a ton of responsible parties, including, obviously, myself. It presumes that I never realized that gosh, if only college were less expensive, maybe this wouldn't have happened.
What's especially insulting is that it presumes to tell me, the person who described at some length the enormous emotional burden of having this kind of loan, what I should and should not be angry about, because it's not fair for me to be as angry as I am. Do you know how infuriating it is to use the word "unfair" like that, as if the real harm here is for me to be too angry at the bank that fucked my life pretty hard? It's perfectly fair for the bank to have charged a high interest rate, because any rate the market charges is, by definition, fair. But no, what's unfair is to be mad about it. That is just unreasonable.
It is like telling someone who has been robbed blind that it's not fair to be so angry at the robber when, if you think about it, if the economy were better and if government had a stronger social safety net, there wouldn't have been any incentive to rob you blind. You know, sure you were robbed and they got away with it, and sure it was degrading and financially ruinous, but don't be too angry at them for it. That would just be unfair.
I've never believed anyone did this to me to punish me. I'd probably feel better about it if they had. Someone, somewhere signed off on this knowing it was a huge burden, but I'm sure it was totally impersonal. I call it a predatory loan because it took advantage of my financial situation to weigh me down with inescapable debt, but I've never believed that they were cackling with glee as they did it. I was just another figure on a balance sheet somewhere. And you know, it's actually pretty dehumanizing to know that the huge weight you bear really means nothing to anyone but you.
posted by shapes that haunt the dusk at 7:33 AM on July 20, 2017 [4 favorites]
I call it a predatory loan because it took advantage of my financial situation to weigh me down with inescapable debt, but I've never believed that they were cackling with glee as they did it.
The cackling comes during bonus season. I'm not sure why it's supposed to feel any better to know that the loans that are choking you are just one more drop in some fund manager's bucket.
It's remarkable to hear the unfairness language thrown around like that, especially with regard to interest rates. There do exist actual legal principles in this area, even if they've fallen out of favor or have been intentionally dismantled through piecemeal preemptions by Congressional Republicans: prohibitions on usury in state law.
posted by snuffleupagus at 7:58 AM on July 20, 2017 [1 favorite]
The cackling comes during bonus season. I'm not sure why it's supposed to feel any better to know that the loans that are choking you are just one more drop in some fund manager's bucket.
It's remarkable to hear the unfairness language thrown around like that, especially with regard to interest rates. There do exist actual legal principles in this area, even if they've fallen out of favor or have been intentionally dismantled through piecemeal preemptions by Congressional Republicans: prohibitions on usury in state law.
posted by snuffleupagus at 7:58 AM on July 20, 2017 [1 favorite]
The loan originators for federally backed student loans are not the loan servicer, so no, there is absolutely no credit check and your personal background and research and due diligence that a bank would normally make with a loan. The federally backed student loan industry is an absolute gift to the banks. They take zero risk, they make money from their name being on a check for a moment in time. The loan servicing industry, the Sallie Maes and Great Lakes of the world, are the ones making money on the crazy interest and non dischargeable debt and selling pieces of debt bit by bit. This doesn't even start to address the loans that are not federally backed. And hey, guess who's in the student loan servicing business? Betsy DeVos. Talk about letting the fox guard the hen house. It will only get much much worse from here.
Why are they even in it? Perkins loans, directly serviced by the government, have a very low default rate. Why aren't they all in the Perkins loan model, i.e. not for profit. Well we know why. In the Reagan 80s the banking industry saw an opportunity for free money and their friends in the government handed it over. Ta da, federally backed student loans. (Honestly though, Perkins might be very low because when you go into repayment they are bundled with your other loans and paid off that way, but still.)
But here's the thing that makes me the most crazy. It is the whole system that savages the working class, people who are told, you will never have a decent life without a college degree. The same people who are less likely to have much financial experience. The same people who have been sold this magical thinking that just getting a degree will insure you a job and better life. The people who will not be able to get that great unpaid internship because they have to work to pay for rent, who will not have connections in any business or industry because their parents didn't go to college. Meanwhile the colleges raise tuition and fees the exact amount that the government raises loan amounts, increases that were supposed to help the students not be on the exact edge of poverty constantly. And on it goes.
It's a terrible system, not designed to make you fail per se, I am sure their are ways to use it where a person doesn't, but it is not designed to help students. The real customers are the banks and corporations etc, not the students.
posted by Belle O'Cosity at 9:21 AM on July 20, 2017 [2 favorites]
Why are they even in it? Perkins loans, directly serviced by the government, have a very low default rate. Why aren't they all in the Perkins loan model, i.e. not for profit. Well we know why. In the Reagan 80s the banking industry saw an opportunity for free money and their friends in the government handed it over. Ta da, federally backed student loans. (Honestly though, Perkins might be very low because when you go into repayment they are bundled with your other loans and paid off that way, but still.)
But here's the thing that makes me the most crazy. It is the whole system that savages the working class, people who are told, you will never have a decent life without a college degree. The same people who are less likely to have much financial experience. The same people who have been sold this magical thinking that just getting a degree will insure you a job and better life. The people who will not be able to get that great unpaid internship because they have to work to pay for rent, who will not have connections in any business or industry because their parents didn't go to college. Meanwhile the colleges raise tuition and fees the exact amount that the government raises loan amounts, increases that were supposed to help the students not be on the exact edge of poverty constantly. And on it goes.
It's a terrible system, not designed to make you fail per se, I am sure their are ways to use it where a person doesn't, but it is not designed to help students. The real customers are the banks and corporations etc, not the students.
posted by Belle O'Cosity at 9:21 AM on July 20, 2017 [2 favorites]
But here's the thing that makes me the most crazy. It is the whole system that savages the working class, people who are told, you will never have a decent life without a college degree. The same people who are less likely to have much financial experience. The same people who have been sold this magical thinking that just getting a degree will insure you a job and better life.
The same people who are increasingly not prepared for an actual college education by their public school education (i.e. allergic to reading more than three paragraphs, unable to write more than a one page, five paragraph essay) and so are basically taking up the slack for their states and school districts by paying $80,000 over the next 30 years to attend what amounts to continuation school at a community college or secondary state university. Which they may flunk out of anyway. Or will graduate from without an actual liberal arts/science education.
posted by snuffleupagus at 4:05 AM on July 21, 2017 [1 favorite]
The same people who are increasingly not prepared for an actual college education by their public school education (i.e. allergic to reading more than three paragraphs, unable to write more than a one page, five paragraph essay) and so are basically taking up the slack for their states and school districts by paying $80,000 over the next 30 years to attend what amounts to continuation school at a community college or secondary state university. Which they may flunk out of anyway. Or will graduate from without an actual liberal arts/science education.
posted by snuffleupagus at 4:05 AM on July 21, 2017 [1 favorite]
« Older “Just one thing I want to say. Fighting games are... | Everybody needs one Newer »
This thread has been archived and is closed to new comments
don't make another payment
posted by indubitable at 7:39 PM on July 17, 2017 [12 favorites]