The good folks at the National Consumer Law Center have just issued a new report that addresses a lot of the problems with student loan lending (pdf download), particularly the problems caused by for-profit "education" mills that really seem to be about something quite different than education.
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The Oregon Court of Appeals has ruled that the hydra known as MERS -- the monstrous placeholding dummy with a million phony vice-presidents, which the mortgage servicing industry created to attempt to evade the requirement (and the fees) that all transfers of interests in mortgages be recorded -- cannot use the streamlined, fast-track nonjudicial foreclosure process in Oregon! Niday v. GMAC Mortgage, LLC et al, "[T]he import of our holding is this: A beneficiary that uses MERS to avoid publicly recording assignments of a trust deed cannot avail itself of a nonjudicial foreclosure process that requires that very thing-- publicly recorded assignments." The nonjudicial foreclosure process was created in the old days when lenders held onto their mortgage loans, which were actually underwritten thoughtfully. Fast forward to the slice-and-dice fast-money 1990s-2000s, when the banksters and money men started financializing everything and you suddenly had a tool that was being used against homeowners in ways never intended, by an entity never imagined by the law, a weird hybrid creature that pretended to be both the beneficiary of the loan (when useful to MERS) and not the beneficiary (again, when useful to MERS). Hurrah for the Oregon Court of Appeals. BULLSEYE! Seems likely the MERS scammers will appeal but, for now, a true shining example of Oregon flying with her own wings and reaching the right conclusion despite a number of other states having missed the mark widely on this issue. A frustrated lawyer in Alabama sums it up eloquently:
This whole area of law is completely out of control. We are creating a subclass of educated (and some not-so-educated) poor people. We are basically creating a class of indentured servants who were essentially unknowingly induced into loans that they cannot repay. Many were sold a bill of goods that they could get good jobs upon graduation and repaying their loans would not be a big issue, then the economy tanked. This is a worse crisis than the mortgage crisis. At least with a mortgage, once they foreclose, you can walk away - student loans are making American citizens slaves to debt collectors and banks - two of the most unscrupulous entities in our society. The taking of 80 year olds' social security money to pay on 30 year old student loan debt is beyond inhumane. I am shocked there has been no rioting or occupy movements based on the outrageous laws Bush signed into law making student loans super-liens on par with, or maybe even above, the IRS. Our founding fathers would not have stood for this type of treatment of their American people. This is a shameful time. No one is immune from bankruptcy. That's the message of a national survey released today by a South-Portland-based financial nonprofit. High-earners and college graduates are among the fastest-growing group of debtors filing for bankruptcy, according to the Institute for Financial Literacy. Bankrupty filing rates for people making $60,000-plus increased by more than 66 percent; college graduates by 20 percent. -- Maine Public Broadcasting report Since "get a college education" is so often prescribed as the cure-all for all our ills, the warning photo to the left is apt -- the higher ed bubble is showing all the same signs as the housing bubble did in its last, frantic moments. Here's a good example of how cut-throat the student loan business (and it IS very much a business) has become. Colleges are holding transcripts hostage, which makes it difficult for the borrowers to get the job they need to pay the loans: This is happening at a time when recent grads are finding it particularly hard to find work, not just in their chosen fields, but anywhere. About half of recent college degree-holders were unemployed or underemployed last year, according to a recent Associated Press study. And the federal Consumer Financial Protection Bureau estimates student loan debt has passed $1 trillion, an amount greater than all outstanding credit card debt. The Department of Education put the default rate at 8.8 percent of student borrowers as of September 2010. It's no accident that colleges are using the withholding of official transcripts to punish students behind in their loan payments. It turns out the federal government encourages the practice. Schools are not required by law to withhold transcripts, but a spokeswoman at the Department of Education confirmed that the department "encourages" them to use the draconian tactic, saying that the policy "has resulted in numerous loan repayments." It is a strange position for colleges to take, however, because the schools themselves are not owed any money. Student loan funds come from private banks or the federal government. For federal Perkins loans, schools get a pool of federal money to apply to students' financial aid, and if students don't pay, that pool gets smaller. But the creditor is still the government, not the college. And in the case of so-called Stafford loans, schools are not on the hook in any way; they are simply acting as collection agencies, and in fact may get paid for their efforts at collection. The other day I warned you about a company that has all the hallmarks of a scam debt relief con -- much like this one in NC (bolded points emphasis is mine):
RALEIGH, N.C. -- A bogus Florida law firm, which claimed it would reduce consumers’ debts by more than half, has been barred from debt-relief work in North Carolina. Attorney General Roy Cooper announced Tuesday that under a consent judgment approved by Wake County Superior Court Judge Howard Manning, The Consumer Law Group of Boca Raton has agreed to pay $600,000 in refunds to North Carolina customers who paid the company for help getting out of debt. “Debt relief scams take advantage of struggling consumers, adding to their burden instead of helping them get out of debt,” Cooper said. “I’m pleased that we’ve been able to win money back for these consumers, money that can hopefully help them pay off bills and get on better financial footing.” The $600,000 payout is on top of approximately $600,000 worth of charges the company agreed not to collect from North Carolina customers. An additional $50,000 will help cover the state's costs for work on the case. The judgment bars CLG from marketing, soliciting or offering a debt-settlement or debt-negotiation services in North Carolina. CLG is also prohibited from claiming that its services are government-sponsored, performed by attorneys, or provide legal representation for consumers. Cooper’s office filed suit against CLG in October 2010 after a probe determined that more than 650 North Carolina consumers had paid CLG for debt-relief work but gotten little or no help in return. People can continue to file complaints about CLG or other debt-relief companies by calling the attorney general’s Consumer Protection Division at 1-877-5-NO-SCAM toll-free within North Carolina, or filling out a consumer complaint form at www.ncdoj.gov. “Don’t pay an upfront fee for help getting out of debt,” Cooper said. “For real help getting your debts under control, meet with a qualified non-profit credit counselor in your local community, who won’t charge you a big fee.” For help finding an accredited, non-profit credit counselor, contact the National Foundation for Credit Counseling at 1-800-388-2227 or www.nfcc.org. _To the left is a pretty extensive laundry list of lawbreaking committed by a Georgia debt collector against consumers in that state. These guys broke the federal Fair Debt Collection Practices Act (FDCPA) in just about as many ways as they could. Keep this list in mind -- if a debt collector ever does any of this to you or anyone you know, contact a consumer attorney immediately. Keep all phone messages, voice mails, and every bit of correspondence you get from the debt collectors, and make a record of when they call, their names, and numbers. If you are in Oregon and you know of anyone who has experienced any of these violations, I would be glad to assist. Courts can and have hit debt collectors with "statutory damages" of up to $1,000 for each individual violation committed against a consumer, PLUS making the debt collector pay the attorney fees for the consumer bringing the action. Mother, Father, Sister, Brother, Aunt, Uncle, Grandfather, Grandmother, Friend:
If you have been asked to co-sign a loan --- for anything at all --- there is a little bit of math you MUST understand before you sign anything: 1) co-signer = borrower 2) borrower = fully responsible for paying back loan 3) lender = (creditor who could not care less that you did not understand that co-signer = borrower) If you do not understand what those three identities are telling you, PLEASE do not co-sign a loan for anyone or anything without consulting an attorney first. GENERATION DEBT -- HOBBLED BEFORE THEY START . . "It's going to create a generation of wage slavery," says Nick Pardini, a Villanova University graduate student in finance who has warned on a blog for investors that student loans are the next credit bubble — with borrowers, rather than lenders, as the losers. Full-time undergraduate students borrowed an average $4,963 in 2010, up 63% from a decade earlier after adjusting for inflation, the College Board reports. What's happening: •Defaults. The portion of borrowers in default — more than nine months behind on payments — rose from 6.7% in 2007 to 8.8% in 2009, according to the most recent federal data. •For profit-schools. The highest default rates are at for-profit schools that tend to serve lower-income students and offer courses online. The University of Phoenix, the nation's largest, got 88% of its revenue from federal programs last year, most of it from student loans. "Federal student loans are like no other loans," says Alisa Cunningham, research chief at the Institute for Higher Education Policy. "The consequences are so high for making a mistake." How sad -- the Legislature couldn't muster the courage needed to stand up to the debt collector lobby. Anyone know how to photoshop the Golden Man to show him kow-towing? Story from Bloomberg: A wave of U.S. state laws that require debt collectors to document exactly who owes what has triggered a state-by-state lobbying battle over rules of evidence that the industry says could slice into profitability. A 2009 law in North Carolina requiring collectors to provide original contracts and imposing penalties for erroneous litigation has slowed the industry’s work in that state. Other states, including Massachusetts, Florida, California and Oregon, have followed North Carolina’s law with similar proposals. Consumer advocates say the laws are necessary to curb abuses. Sounds great, right? Sounds like Oregon is going to follow a law that has worked to stop abuses in debt collecting. Er, um ... not so fast: The law’s effect in North Carolina emboldened consumer groups and their legislative allies to push ahead in other states, and mobilized industry opposition as well. In December 2010, a similar bill in Oregon faced organized industry opposition at a hearing, and died in committee. “I was surprised at the degree of lobbying to stop this,” said Angela Martin, executive director of Economic Fairness Oregon, a consumer group. “We thought we had a consensus bill.” Great, now regular banks are getting into the legalized loan sharking known as Payday lending9/12/2011 From the Naked Capitalism blog: Payday Loans Are Dead! Long Live Payday Loans! In yet another example of finance double-speak, major financial players have moved into that netherworld of the functional equivalent of loansharking known as payday lending. While in theory short-term loans can be a boon to cash-strapped individuals, in practice, the usurious interest of payday loans result in many borrowers falling into a debt treadmill. The Pentagon was so concerned about the way that payday lending could wreak havoc with the lives of combat personnel that it restricted the rates that could be charged to military personnel to 36%. The industry howled that rules would drive payday lenders out of the business of serving the armed forces (they had previously been targeting bases). I suspect that result was a feature, not a bug. . . . But some industry critics say fixed-income borrowers are not only more reliable, they are also more lucrative. Often elderly or disabled, they are typically dependent on smaller fixed incomes and are rarely able to pay off their loans quickly. “It’s not like they can work more hours,” says David Rothstein, an analyst at Policy Matters Ohio, an economic research group in Cleveland. “They’re trapped.” The latest sighting, via the Associated Press (hat tip April Charney) is that bigger, more reputable-looking banks are offering payday loans, but predictably calling them something else, in much the way that the term “escort service” is meant to imply something more refined than “prostitution”. From the Clarion Ledger: Perhaps muttering, if you can’t beat ‘em, join ‘em, big banks are now aping the payday lending industry and offering short-term loans at rates that once were called usurious. The banks are not calling them payday loans and say there are safeguards that distinguish them from payday loans. But, it’s still a short-term note. Wells Fargo, for example, offers its loans for direct deposit customers. As The Associated Press has reported, it says customers can only borrow up to half their direct deposit amount or $500, whichever is less. Its fees are cheaper too, at $7.50 for every $100 borrowed. That still amounts to a 261 percent annualized interest rate over the typical pay cycle. The amount of the advance and the fee are automatically deducted from the next direct deposit. . . . Review by: Ira Rheingold, Executive Director, National Association of Consumer Advocates The Subprime Virus: Reckless Credit, Regulatory Failure and Next Steps by Kathleen Engel and Patricia McCoy About a month ago, I had the privilege of testifying before a House Financial Services Subcommittee about the impact of new mortgage regulations on "Homeowners and Businesses." In entering the committee room and later listening to my fellow panelists (two for consumers, eight for industry), I had this terrible feeling that I had entered a new dimension, where memories had been wiped clean and responsibility and accountability were words that had no meaning or place. I sat and listened as the very same people who for years defended the indefensible banking industry's insatiable greed that led to our nation's economic collapse, complain bitterly about the state of the housing and mortgage markets and how government regulation was stifling their ability to grow (and of course, create jobs!). Beyond displaying my utter dismay that many members of Congress were giving these folks a level of respect and credibility they completely did not deserve, I really had no idea how to respond. Looking back, what I should have done to help them cure their collective amnesia was hand them Kathleen Engel and Patricia McCoy's new book, The Subprime Virus. In The Subprime Virus, Ms. Engel and Ms. McCoy (who I should note, I have known and worked with for many years), in a strong and clear narrative voice, take us back to the beginning, to the early 1990s, when predatory lending became a household word to those of us working for consumers in our nation's poorest communities. They walk us through the growth of securitization and do a supreme job of explaining the alphabet soup of Wall Street lawyerly constructs (CDOs, SIVs, CDSs) that created the opaque and unregulated legalized gambling system that served to spread predatory lending from Chicago's South Side and West Virginia's back hills to the main streets of middle class America. But beyond compellingly recounting this history, The Subprime Virus wonderfully explains how bank greed and government blindness and complicity led to the mortgage market collapse. Anyone reading this book, will walk away not only fully understanding the mortgage industry's destructive behavior but also should be completely outraged at the OCC's cynical efforts to grab power and protect banks, and the Federal Reserve's ideologically driven inattention to consumer protection. Finally, for those of us interested in actually learning from history, The Subprime Virus offers a clear analysis of what we'll need to do to rebuild a safe and just housing and mortgage marketplace. And for those us who simply want to hold our friends in the banking industry and in government accountable for their failures and never let them forget their responsibility for our current economic crisis, The Subprime Virus is not only a must read, but a great present. I may just need to leave a few copies behind next time I'm visiting Congress. Here's what appears to be a helpful site with information about credit card bills. One caution about this site though: don't think that this site (or any other) equips you to do your own credit card debt defense.
The best thing to do is consult a consumer attorney before you start falling behind on credit card and other bill payments. The next best thing is to consult a consumer attorney as soon as you start falling behind on your bills. Almost the worst thing you can do is wait until after the card company has filed a lawsuit against you to consult a consumer attorney. THE WORST thing you can do is not consult a consumer attorney when you're being sued on a debt and letting the other side win by default. Every day, creditors and debt collectors file countless lawsuits that have absolutely zero merit. That is because, every day, collection agencies and creditors sell mountains of bad debts to each other in a massive shell game of "Whack-a-Mole," with each one gambling a few pennies for the chance to try and squeeze dollars out of you on debts that the prior collectors could not collect. What this means to you is that you might get sued on a debt you never owed, a debt owed by someone else entirely, a debt that is time-barred, a debt that you discharged in a bankruptcy, a debt that they cannot prove to exist, or even a debt that a court already voided before! The Best Possible Gift For Your HS Graduate: A realistic understanding of Student Loan Debts6/14/2011 Gary Liberson, Huffington Post - The PEW Research Center looked at the issue of college pricing in their report,"Is College Worth It?" Their findings validate the tensions caused by the high cost of a college education: A majority of Americans (57 percent) say the higher education system in the United States fails to provide students with good value for the money they and their families spend. A record share of students are leaving college with a substantial debt burden... a quarter say it has made it harder to buy a home (25 percent); and about a quarter say it has had an impact on their career choices (24 percent). Nearly every parent surveyed (94 percent) says they expect their child to attend college... most young adults in this country still do not attend a four-year college. The main barrier is financial. Over the last 18 years, every dollar added to the cost of a college degree has only put 14 cents of annual income in a graduate's pocket. Bottom line: No young person should be taking new student loans without being very well advised on the upside and downside risks, which are substantial, and having a well-researched "Plan B" for how to avoid a lifetime of crushing debt obligations if the typical young adult's version of Plan A ("Get in debt up to my eyeballs, graduate, get great job, get out of debt easily") doesn't turn out to work. From the great folks doing important work at Economic Fairness Oregon:
A Homecoming Without a Home EFO launched a website today dedicated to helping Oregon resident Tim Collette and the countless homeowners like him. Homecoming Without a Home highlights Tim’s case - he’s slated to lose his home to Chase Bank on the courthouse steps in 10 days. Tim's son Aaron is due to return home on leave from Iraq just eight weeks after Tim's foreclosure sale date. The website includes a countdown clock to Tim's foreclosure sale, details on how Tim did everything right in trying to save his home and also features videos and daily updates on Tim's fight with Chase. Of course, we all know Tim is just one of thousands of other Oregonians facing foreclosure in our state, and we’re dedicated to changing the rules so that every homeowner has a fighting chance against the big banks – that’s why the site also includes viable solutions to the foreclosure crisis at both the federal and state levels - including Oregon bills SB 826 and 827. Tim has two strong advocates working on his case – U.S. Senator Jeff Merkley and Oregon Attorney General John Kroger. Both of their offices have contacted Chase directly. Merkley also took to the U.S. Senate floor just about an hour ago to speak about mortgage servicing reform – and shared Tim's story with his fellow lawmakers. But this isn’t just about Tim. Both Senator Jeff Merkley and Attorney General John Kroger have been champions for real foreclosure reform. There are other leaders too, such as Senator Suzanne Bonamici - the chief sponsor of SB 826 and SB 827. But they cannot do this alone. Please stand strong with these leaders, with Tim and with the tens of thousands of Oregon families facing foreclosure. Please visit Homecoming Without a Home for the latest progress and news on Tim and mortgage servicing reform. Economic Fairness Oregon is a non-profit, non-partisan organization dedicated to consumer protection and fair lending laws. Our goal is to restore a financial system built to work for the people, not against them. From Economic Fairness Oregon: SB 577 - Curbing deceptive and aggressive debt collection practices: This bill would give consumers access to more information regarding their alleged debts, and more avenues to pursue illegal and abusive debt collectors in court. According to a recent FTC report, the debt collection world is riddled with abuses and lack of transparency. Among the serious issues the research outlined:
Keep an eye out for these e-mails to stay current on the status of these bills and other important consumer protection legislation. For daily updates, visit us on Facebook. Economic Fairness Oregon is a non-profit, non-partisan organization dedicated to consumer protection and fair lending laws. Our goal is to restore a financial system built to work for the people, not against them. Know someone who would like this message? Share it:
This is why you should not suffer in silence if you are being harassed or abused over a debt: because there are laws to protect your family and your dignity from abusive collection practices, regardless of any financial reversals you have suffered that make it hard to pay your debts. The firm below operated all over the state. If you or someone you care about is being harassed or abused over a debt, contact an attorney. You do have rights, debts or no debts.
EUGENE-AREA LAW FIRM SHUT DOWN FOR UNLAWFUL DEBT COLLECTION PRACTICES March 17, 2011 Derrick E. McGavic must pay $70,000 and cease practicing law Attorney General John Kroger today announced an agreement that shuts down a Eugene-based law firm that was the subject of dozens of complaints about its debt collection practices. In addition to closing down McGavic & Finney PC, the settlement requires founding partner Derrick E. McGavic to pay $70,000 and surrender his license to practice law. "At a time when many Oregonians are struggling to manage their debt, the Department of Justice is committed to holding unscrupulous debt collectors accountable," said Keith Dubanevich, Chief of Staff and Special Counsel to Attorney General Kroger. The Department of Justice started investigating McGavic and his partner Kristan Finney after receiving more than 90 complaints against their law firm. McGavic was simultaneously undergoing an investigation by the Oregon State Bar. McGavic & Finney specialized in representing national debt collectors that buy defaulted consumer obligations in massive quantities on the secondary market – often for pennies on the dollar. Consumer complaints filed with the Oregon Department of Justice accused McGavic of systematically ignoring debtor protections and rights afforded under the Oregon and Federal Debt Collection Protection Acts. For example, McGavic allegedly misidentified or purposefully confused the identity of creditors in documentation to delay consumers' response and thus increase fees and interest payable to McGavic and his clients. Notices issued by McGavic allegedly omitted specific information related to the amount of the defaulted debt and failed to provide proper verification of debts when requested by consumers. Similarly, McGavic allegedly repeatedly called debtors who had requested in writing not to be called. The Department of Justice's investigation also uncovered McGavic's pattern of falsifying fee affidavits in Motions for Default Judgments by claiming services he did not perform. In addition, McGavic allegedly provided his office staff with a schedule to be used to arbitrarily increase the fees claimed - depending on the amount of money claimed or the venue of the action. The agreement filed March 16 in Lane County Circuit Court requires Derrick McGavic to pay $70,000 to the Oregon Department of Justice to reimburse the cost of the investigation; dissolve the law firm of McGavic & Finney, PC; and resign from the Oregon State Bar. McGavic is further prohibited from acting as a debt collector or operating a law firm or a collection agency in the State of Oregon. Kristan Finney may continue to operate under a different business or firm, subject to numerous stringent injunctive provisions specified in the settlement agreement. Senior Assistant Attorney General Gregory Smith handled the case for the Oregon Department of Justice. Attorney General John Kroger leads the Oregon Department of Justice. The Department's mission to fight crime and fraud, protect the environment, improve child welfare, promote a positive business climate, and defend the rights of all Oregonians. Contact: Tony Green, (503) 378-6002 tony.green@doj.state.or.us | Sallie Mae that is. An excellent link dropped in one of the comments to this letter to the editor in the Statesman-Journal (text below).
There is not a week that goes by that I don't see people who found out that, when they weren't even old enough to buy a beer, they signed up for a lifetime of outrageous above-market interest rates and backbreaking fees, all courtesy of the student loan-sharks who are not taking any risk on student loans, since the government guarantee eliminates the risk! This is the kind of legalized piracy that threatens our nation's future -- oppressing people following the conventional wisdom ("Get an education") is like pouring gasoline all over the barn floor and lighting matches randomly. Every year the debt tsunami floods out more and more young-- and now middle aged people -- who have been carrying these absurd loans for years and still wind up facing bigger balances than ever. This is highly toxic stuff for a democracy. I spoke at the recent town hall meeting with Rep. Kurt Schrader about how consumer protections need to be restored to student loans. If you get in over your head with credit cards, you can get a fresh start with bankruptcy. If you can't afford your home, you can give it back to the bank. Student loans are the only loan that it is impossible to get out from under when you can't afford to pay them. Lenders can garnish wages, pensions or disability payments. You can be forced to pay no matter how low your income or whether you are old or disabled. After I spoke at the meeting, two member of the audience turned around in their chairs and thanked me for my comments. Another asked to read my notes. These laws really need to be changed. There is no protection for consumers who could not find better jobs and afford to pay off their debt. — Jessica Hopkins, Salem A commenter submitted this comment to another post but it is so full of warnings that (with some editing) I'm elevating it to a post. Be careful out there people! Just because they have "college" or "school" in their name, that doesn't mean that they are anything but a University of Hard Knocks. Note how badly this poor person was abused -- enough to be grateful to the collection agency for showing some minimal human decency:
I attended [School X] (now called [School Y]) in Tampa, FL. I moved there just to attend this school. Unfortunately, my ex became abusive and I had to leave unexpectedly after my 1st semester. I made an A in medical terminology and a B in my career success class. A few years later, I went to reapply to college and they tell me I need transcripts from [School X/Y]. I call [School X/Y] to retrieve them and they tell me I owe the school $800.00. What?! And there was no getting around it. They were rude and never returned my calls; when I did talk to them they gave me a runaround. About six arguments and a few rude people later, they tell me we can't even help you it's been sent to the collections. UGHHHH! These people are messing my with my education. . . . my life! They wouldn't give me info on the debt or anything. Finally after weeks of pulling teeth, I find out I can't use this credits and they've continued to charge me for credits I didn't take. So they basically kept charging me like I was physically there in class. . . . CRAZY, right? So now the hard work I did do, I can't use 'cause THE CREDITS AREN'T TRANSFERABLE, they mean nothing to my future school. [Collection agency] was the debt collectors and they definitely made my situation easier and pleasant right off the bat. They even gave me a discount, which I greatly appreciated. I will gladly own up to any debt but [School X/Y] school had no right to charge me for 16 credits when I only completed 6. That company is a joke. But everybody I spoke with at [Collection Agency] was GREAT and I can't thank them enough, to top it all off they even sent in my transcripts request form! So my ties are hopefully done with [School X/Y] and I can get a real education now. . . Wow. I had to read this twice to ensure it wasn't an Onion satire . . . nope, this is how it is. Should be copied and given to every student with every FAFSA (the form that starts each little trickle of debt, with each one joining all the other little trickles of debt into a mighty river and then a bottomless abyss of debt that is drowning more and more young people (and many not so young people) each year, as they learn that student loans are often like herpes or drug-resistant syphilis: a lifetime of suffering for a brief act of poor judgment committed by a young person without even the legal right to buy beer. As I wandered around the crowd of NYU students at their rally protesting student debt at the end of February, I couldn’t believe the accumulated wealth they represented – for our industry. It was lip-smacking. . . . Putting aside some of the less savory aspects of loan origination, we can consider this, “good news in the pipeline.” As bill collectors and debt buyers only work on what is termed bad debt, which is guaranteed under these circumstances and in today’s economic environment – we are in for lifetime employment! Will Students Begin Dusting off the Pitchforks? Alan Collinge of StudenLoanJustice.org is one of the aggrieved that is leading a backlash. His research has shown that the Department of Education makes more on its defaulted loans than it does on its paying portfolio. As Alan states wryly, “This is exactly what the first President Bush meant when he declared his intention “to run government like a business.” . . . I allow that it is a bit of a bummer to consider the very real but incalculable cost to America and Americans in the damage done to those who intended to use their education to better themselves and their communities. These people were to be our future nurses, engineers, lawyers, salespeople – taxpayers! As many employers now pull credit reports on job applicants, our defaulting student loan applicant is almost automatically assured a “No, thank you” no matter how otherwise qualified they might be. This is just one way in which those who went to expensive private schools to earn a more prestigious degree are denied the gainful employment sufficient to even pay back the loans! These are the people who are now marginally employed, living either on the welfare of their family…or the state…and are poster children examples of the products of Predatory Lending and heated pursuit. “Student-loan debt collectors have power that would make a mobster envious.” This was told a reporter in a WS Journal interview last year with Elizabeth Warren, a Harvard Law School professor and bankruptcy specialist and now Director of the new Consumer Financial Protection Bureau. (Another source to thank. Republicans are campaigning to cut this department’s funding in half). As reported by Mother Jones, the new Consumer Protection Bureau – created to crack down on shady real estate loans and predatory lenders – was not given that same authority to deal with student loans described as by (the then) New York Attorney General Andrew Cuomo as the ‘Wild West’ of lending. “Private student loans are exactly the kind of dangerously under-regulated financial product that the Consumer Financial Protection Bureau needs to oversee,” Pauline Abernathy, vice president of the Institute for College Access and Success, said. “Failing to give the new bureau full authority over all private student loans would leave young people and other vulnerable consumers, and our economy, at the mercy of unscrupulous lenders.” And collectors, I might add. A potential problem for us: student see no difference between loan predators and varmints . . . Think again. Here's why: This is the text of a post to a lawyers' group from a member who is trying to figure out how to help a client: I need some help with the following scenario: Client co-signed student loans for “friends” with Sallie Mae. Friends have stopped (or never started) paying on the loans. Sallie Mae has sent client a letter demanding payment. Friends are no longer communicating with client. I have not been able to find a way to extricate client from the loans absent the original debtor making 24 consecutive months payments AND Sallie Mae agreeing to remove her. I am trying to determine client’s rights as against “friends.” Can client get a judgment against original debtor and garnish wages because they didn’t make payments? Yikes -- imagine yourself trying to figure out how to go after a "friend" for an unpaid loan that you co-signed. While the professionals laugh all the way to the bank, you'd be left trying to figure out how to get and collect a judgment against a person with no written contract between you. Good luck with that. MORAL OF THE STORY: do not co-sign for a loan for a friend or family member unless you could afford to make the loan yourself and lose the entire amount. College debt meets real life
Living with parents. Struggling to cover medical bills. Abandoning dreams of the perfect job. . . . "My student debt has made me nervous to take chances," one woman wrote. "I haven't been able to afford health insurance," said a 2010 graduate of Minnesota State University Moorhead. "Student debt has deterred me from pursuing many job offers (and passions -- I would love to work with a nonprofit organization assisting veterans) that did not pay enough," said a woman who expects to pay back more than $40,000 in student loan debt over 30 years. Many students surveyed went straight to graduate school. That decision defers loan payments but eventually adds to them. "That may not be the best idea in the long term . . . . At least it gives you a little more time. It's especially hard with this job market." Halfway through, the survey asks: "Looking back, how would you change your college experience, related to finances?" "I wouldn't have gone," Ezra Kazee answered. Kazee finished his political science degree at Winona State University in 2008. Thanks in part to $300 monthly loan payments, his family lives paycheck to paycheck, he said. "At the end of the day I have mortgaged my life and my children's future for an education that did absolutely nothing for me." He works as a debt collector. Should you walk away from your mortgage? Declare bankruptcy? Try for a short sale? Tap retirement savings and hang on? Seek a modification?
Frankly, I have no idea what you should do. What I can tell you is why consulting a lawyer as soon as you think there might be mortage trouble makes sense. What a lawyer can do for you is tell you how, under the law, each of those alternatives (and others) will affect you (your credit score, tax situation, . . . ) so you you can decide your best course of action. But there are a lot of people are getting to know the ins and outs of all this. Why hire a lawyer? What you get when you hire an attorney is a professional with an ethical duty to put your interests first, ahead of everyone else's. If you talk to someone in the real estate industry (your banker, broker, agent, homebuilder, a refi salesperson, or a "foreclosure rescue outfit"), they have zero duty to consider your interests at all, much less to put your concerns ahead of theirs. And, typically, their interest is in having you pour as much money into your mortgage as you can, regardless of whether you ultimately lose the house or not. Of course I'm delighted if you make an appointment and consult with me about your situation. But even if I never see you, I hope you will call an Oregon attorney for advice before you find yourself with your options foreclosed along with your house. You can request referrals from the Oregon State Bar Lawyer Referral Service by calling 800-452-7636 and telling them you want a referral to an attorney who can counsel you about your options for dealing with your mortgage. Don't wait until the foreclosure process starts --- you have the greatest number of options if you take control of your situation while you are still current on your mortgage. Another story about the way students are encouraged to borrow huge sums for the promised rewards that rarely come.
The single mother in a small town near Salt Lake City wanted an associate's degree as a first step toward medical school. She said she chose Everest, a for-profit college, after a recruiter guaranteed that she could apply her credits toward a higher degree at the University of Utah. It wasn't until after she graduated in 2008 — two years and $30,000 in student loans later — that Miller learned the state university wouldn't take her credits from Everest, a unit of Santa Ana-based Corinthian Colleges Inc. "I got completely taken advantage of, and now I'm struggling to pay the bill for it," said Miller, now 26. "I got sold my degree by a used-car salesman. I got a lemon." . . . |
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John Gear is only licensed to practice law in Oregon. This site may be considered advertising under Oregon State Bar rules. There is no legal advice on this site so do not take anything you read here as advice for your particular problem or situation. And I do not represent you and I am not your attorney unless you have hired me with a representation agreement. While I do want you to consider me when you seek an attorney, you should not hire any attorney based on brochures, websites, advertising, or other promotional materials. All original content on this site is Copyright John Gear, 2010-2022. |