Thousands of private student loan borrowers could be granted restitution since the Consumer Financial Bureau found that National Collegiate Student Loan Trust violated federal consumer financial laws. The Bureau is holding NCSLT and one of their collectors, Transworld Systems accountable for violating the Dodd-Frank act by means of illegal student loan debt collection lawsuits. National Collegiate Student Loan Trust is a series of trusts that receive deposits of student loans from an entity that purchased them from an original creditor or bank. Both NCSLT and their collection agency allegedly filed hundreds of lawsuits without proper documentation or adherence to the statute of limitations. No documentation was presented to reflect that NCSLT owned the loan or even that the consumer owed that debt. Additionally, many of their suit’s affidavits did not have the necessary witnesses and notarized signatures to be considered valid. Finally, negative credit information should never have been filed in these suits.
The proposed final judgment and consent order by the Consumer Financial Protection Bureau requires both NCSLT and their collection agency to pay at least $21.6 million due to their deceptive practices. Charges for NCSLT include $3.5 million in restitution to over 2000 consumers; $7.8 million in civil money penalties; $7.8 million in disgorgement and for additional damages found in an audit. NCSLT needs to perform a mandatory audit of 800,000 student loan debt files in their portfolio. For loans found to be unsupported with evidence or unacceptable to meet the burden of legal standing, NCSLT must not file any law suits, attempt to collect or report negative credit information. For their involvement, Transworld was ordered to pay $2.5 million in civil money penalties. Notably, both companies were prohibited from filing false notarized legal documents; suing consumers for debt without proper documentation; and disregarding the statute of limitations which are all common in these NCSLT cases.
http://files.consumerfinance.gov/f/documents/201709_cfpb_national-collegiate-student-loan-trusts_complaint.pdf