Recently in the news it is reported that the Consumer Financial Protection Bureau has taken action against Wells Fargo with regard to their private student loan servicing laws. The bank’s servicing arm, SD Education Financial Services, which originates and services the roughly 1.3 million private student loans failed their clients on multiple fronts, including charging the legal fees, failing to accurately update credit reporting information, processed payments in ways that increased the burden of fees on their clients, and provided inaccurate information, and made “materially inaccurate representations*” about the value of making partial payments.
Wells Fargo neither admits or denies the charges, said that a small number of customers were affected years ago by procedures which have since been corrected, and will pay a settlement totaling $4.1 million to make it all go away. $3.6 million of the settlement will go to the consumer financial protection Bureau, and $410,000 will be refunded to borrowers. Though for a company with $22.89 billion in net income it seems to be less trouble than a jaywalking ticket. Along with a fine and reparations, Wells Fargo is subject to a consent orderdictating that they improve servicing practices, provide clients with improved disclosures – including application of payments – and correct erroneous information entered on credit reports.
Loan servicing for student loans on all fronts, both federal and private, have what might generously be termed room for improvement. In fact, being fired by the Department of Education for making “materially inaccurate representations” – if you sense a theme in all this, you’re not alone – to borrowers in default. In March 2015, five companies charged with collecting federal student loans were fired for just such behavior. The department said that they had provided borrowers in default with “unacceptably high rates” of inaccurate information.
Coast Professional, Enterprise Recovery Systems, National Recoveries, Pioneer Credit Recovery (owned by Navient), and West Asset Management all failed to have their contracts renewed for that year. Coast Professional and National Recoveries were then rehired in March 2016 – one year later – after taking corrective actions to address the violation of federal consumer protection laws. Meanwhile Enterprise Recovery and Pioneer Credit Recovery has been paid over $15 million and $10 million respectively by the Department of Education in the first quarter of 2016. This while suing the department for termination of the contract for Coast Professional, Enterprise Recovery Systems, National Recoveries, and Pioneer Credit Recovery. The suit was dismissed, and the dismissal is being appealed.
If you’re feeling like a little fish swimming with these big sharks, it may be time to get some legal and financial advice. A consultation is free, and available at the Fort Lauderdale and West Palm Beach offices. The big sharks have lawyers on their side, and so should you. If you have been involved with any of these loan servicers and they have made “materially inaccurate representations” that have resulted in harm to you, please call and let’s start making you whole.
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