Student Loan Creditor, Fined for ‘False’ Lawsuits, Must Halt Collections
In Monday’s settlement with the Consumer Financial Protection Bureau, the trusts agreed to pay nearly $19 million in penalties
and borrower refunds — and could be on the hook for millions in additional payments and forgiven loans.
The insurance company Ambac, which has hundreds of millions of dollars of exposure to National Collegiate’s securities through insurance it sold to investors, warned last month in a regulatory filing
that it might need to set aside an additional $200 million to cover losses on its student loan portfolios.
The creditor, the National Collegiate Student Loan Trusts, holds $12 billion in student loans that were originally made by banks.
As part of the $19 million pact, National Collegiate agreed to set aside $3.5 million for refunds to 2,000 borrowers.
The audit will allow us to figure out the scope, come up with a compliance plan and make the changes that need to be made.”
Mr. Uderitz has been locked in a legal dispute with other companies involved in operating the National Collegiate trusts.
Those borrowers had made payments after being sued over loans
that were legally uncollectable, either because the statute of limitations had passed or because National Collegiate lacked the documentation needed to collect the debts in court.
