New signs of trouble for student loan borrowers
BY SETH FROTMAN
Earlier this year, we asked you to share your stories about student debt stress. More than 30,000 of you responded, telling us that student loan servicers (the companies that send you a bill each month) can make it harder to manage your loans and may contribute to our nation’s growing student loan default problem.
Do you want to buy a house now but your finances aren’t quite there yet? Underwriting requirements are some of the strictest we’ve ever seen even for those with good credit. Don’t give up! We have put together information on a variety of private lenders who will finance a home with scores as little as 600 or 620 and in as little as one day after foreclosure, short sale, deed in lieu and even bankruptcy!
Many of our clients who are past their financial problems of the past few years (short sale, deed in lieu, foreclosure, bankruptcy, debt settlement etc.) are now wanting to get into a house, particularly while prices are rising and interest rates are expected to start going up in late 2015 and almost certainly 2016. Also tenant demand is very strong and it’s hard to find the right place to rent. Rents are often higher than a new mortgage payment would be for an affordable house bought at today’s prices.
We have many ways we can help such as:
In our Florida student loan law practice, we see everyday the nightmarish situations our former students have gotten themselves into. One this week has me researching the differences between national versus regional accreditation. I’ve been a lawyer for 20 plus years and I hadn’t even known what this meant. My basic thought was accredited is good right? And no accreditation is bad. Should be simple, just make sure you go to an accredited school. Wrong.
Actually, there are different types of accreditation which are commonly referred to as national versus regional. Again, you’d think national would be good right? But, no, regional is far better. For a client, a “national” accreditation means a much higher default rate (twice as many defaults in repayment of student loans) b/c the B.S. or B.A degree they studied hard for is not really worth what they thought it was. See a September 8, 2015 Center for American Progress Analysis RELEASE noting troubling high student loan default rates among colleges accredited by national accreditors. Default rates are important: they are another way of telling us that the education received has not warranted the student loans sought to be repaid for that education. If a student is unable to obtain employment in their field due to the inadequacy of their education, they are much more likely to not be able to repay their student loans.
Now, over 100k in student loans later, my client is faced with having to get a “replacement” B.S. degree if they hope to ever move up in their employment just because he chose a school, International Academy of Design and Technology, (“IADT”) that he thought was accredited, but was actually “nationally” accredited by the Accrediting Council for Independent Colleges and Schools. Our client was turned down a job specifically because of the type of accreditation behind his degree. Even though he was one of the lucky ones to have graduated (for-profit schools have a high dropout rate), it has done him no good whatsoever.
Sometimes our Florida foreclosure defense clients wait too long to challenge a foreclosure. This is the primary reason why we attorneys always post advice and blog incessantly about not letting a mortgage company get a default judgment or challenging a default if one occurs.
However, a client can also wait too long on the back end to challenge a final judgment. In Branch Bank & Trust Co. v. Michael’s Enterprises of Virginia, Inc., 519 B.F. 916 (Bankr. E.D. Va. 2014), a homeowner waited until a week after the sale and sought a temporary injunction which was denied. The sale proceeded and several months later the debtor refused to vacate the property and filed bankruptcy.
In the bankruptcy, the debtor attempted to collaterally attack the judgment already entered. Claims cannot be re-litigated, they can only be appealed. The Court awarded sanctions against the debtor, its shareholder and its legal counsel for $10,000. The debtor in this case attempted to argue that the foreclosure sale was a fraudulent transfer because it was for less than 70% of the market value. This argument failed to impress the U.S. Supreme Court in BFP v. Resolution Trust Corp., 511 U.S. 531 (1994) which was followed by the bankruptcy court.
Green Tree to Pay $48 Million in Borrower Restitution and $15 Million Fine for Servicing Failures. See this announcement from the CFPB and the Federal Trade Commission.
Locally in Tampa Bay, Florida this is resulting in Greentree seeking continuances for all trials – including one this morning on behalf of one of our clients – to make sure that they are in compliance with this order. Perfect timing, because our client just submitted her loan modification paperwork in an effort to keep her home after her divorce.
I thought it would be useful to post what exactly are some of the mortgage servicing requirements by the new RESPA rules:
In Florida, the right to revoke calls to a consumer’s cell phone is alive and well. Debt collectors who continue to call these cell phones after being told not to are exposing their companies to damages of up to $1,500 per call. That adds up quick.
So don’t just ignore or block the calls. Take a call. See who it is. Write down who it is, and tell them not to call your cell phone again. Write that down along with the date and time of the call. Then keep a log of calls or take screen shots of continued calls. You don’t have to answer them all. Just the fact they are continuing to call is good enough. The good creditors will follow the law and stop calling. Problem fixed. For the ones that keep calling and ignore your directive not to call their cell phone, we’d like the opportunity to go after them.
Here’s some current law on the right to revoke consent to call (I recommend telling them not to call and writing down the date and time and who you spoke to — even if you didn’t give them permission to call in the first place).
The absolute deadline for filing BP oil spill claims is June 8. Now that we see BP paying on these claims again, we don’t want anyone to miss this deadline. Remember the trickle down effect applies to most businesses in the affected counties. We help those located around Tampa Bay. Arkovich Law
Bankruptcy filings are down substantially in 2014 to only 910,090 which is the lowest number since 2007. Yet at the same time, people are still losing their homes especially in Florida, wages are flat or down and the cost of living continues to rise other than gas which isn’t too bad).
So why are the bankruptcy filings down? Well in some areas, the economy is picking up. Interest rates to carry debt remain low. But overall, I think some of this has to do with the fact that people cannot even afford to file. Many folks in the Tampa Bay area come to us to file when they receive a tax refund – but this year, many people had their tax refund intercepted due to defaulted federal student loans.
There is a way to file bankruptcy on the creditor’s dime that no one really talks much about: talking to an attorney about pursuing debt collection violations. Not all bankruptcy attorneys do this, so you need to talk with someone who actually sues for creditor violations plus files bankruptcy.
The Consumer Financial Protection Bureau (CFPB) recently fined DriveTime Automotive Group, Inc. $8 million for harming customers for making harassing debt collection calls and providing inaccurate credit information to credit reporting agencies. Such a large fine underscores the importance of the consumer protection laws such as the FDCPA, the FCCPA for Florida consumers and the TCPA for cell phone calls.
These consumer statutes basically allow private attorneys to sue creditors on behalf of their clients and obtain both statutory damages and attorney’s fees. Without that, no one would be able to financially afford to challenge creditor violations.
So what were the most common violations by DriveTime that the CFPB found?
Revocation of Consent
One of the pressing issues in pending litigation under the Telephone Consumer Protection Act (TCPA) is whether a consumer can revoke consent to receive calls on a cell phone. The TCPA requires prior express consent before a consumer can be contacted on a cell phone using an automatic dialer or prerecorded message, but the statute is silent on the right to revoke. So that raises two threshold questions: can prior express consent be revoked and, if so, what constitutes valid revocation?
There is a split in authority on whether consent can be revoked under the TCPA, but a number of courts are ruling that the conclusion that consent is revocable. The U.S. Court of Appeals for the Third Circuit was the first federal appellate court to address this issue. In Gager v. Dell Fin. Servs., LLC, 727 F.3d 265, 270-72 (3d Cir. 2013), the court held that a consumer has a right to revoke consent notwithstanding the absence of a statutory provision specifically authorizing revocation. Applying the common law concept of consent, the court reasoned that a right to revoke is not inconsistent with prior FCC decisions. Several courts have followed the Third Circuit’s lead, including the Eleventh Circuit (which governs the State of Florida) in Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242 (11th Cir. Mar. 28, 2014).
Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog