Last week, the Consumer Financial Protection Bureau sued the infamous entity known as National Collegiate Student Loan Trust. The lawsuit points to three main allegations against NCSLT: (1) it sued people for debts that it couldn’t prove were owed; (2) it filed false and misleading affidavits in court; and (3) it brought nearly 500 lawsuits after the time limit to sue had expired.
On the same day the suit was filed, the CFPB also filed a proposed settlement with NCSLT. This surely means that the CFPB had been investigating the trusts for some time and only filed the lawsuit after NCSLT had agreed to the CFPB’s proposed settlement. Under the terms of the settlement, the National Collegiate Trusts have agreed to:
*Not start a lawsuit unless NCSLT has a copy of the signed promissory note and documentation that it owns the loan
*Not file suit in a case where NCSLT knows that the time limit to sue has passed or has other information that leads it to believe that the loan would be unenforceable
*Stop filing false and misleading affidavits and withdraw any false or misleading affidavits that have been filed in pending cases
*Stop all wage levies, bank garnishments, and other post-judgment collection efforts if NCSLT had filed a false or misleading affidavit in the case
National Collegiate Student Loan Trust has also agreed to allow an independent audit of all the loans in its portfolio and has agreed to pay over $15 million in penalties to the CFPB. Further, NCSLT has 120 days from the day the settlement is approved to identify the consumers affected by its illegal practices and refund up to $3.5 million to those consumers.
This settlement is not final until it is approved by the court. Once the settlement is approved, I’ll update this post with more information, including next steps for affected consumers.