Volume 2014 - Number 16
April 25, 2014
Odds of More Oversight of Student Loan Servicing Rises After CFPB Criticizes Auto Default Practice
In a development with potentially negative implications for lenders, servicers and investors in student loan ABS, the Consumer Financial Protection Bureau released a report this week critical of the “auto-default” practice seen in private student lending. According to the CFPB’s Mid-Year Update on Student Loan Complaints, borrowers say that some lenders demand immediate full repayment upon the death or bankruptcy of their loan co-signer, even in cases when the loan is current. Borrowers also said they confronted bureaucratic barriers to releasing co-signers from their loans, something that could help avoid auto-defaults. “Students often rely...
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This weekly covers the secondary mortgage market, including mortgage-backed securities and asset-backed securities.
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