Earlier this year, the country’s largest mortgage servicers agreed to reform their practices and pony up $25 billion in a multi-state settlement to atone for faulty foreclosures. A new report out Tuesday from the federal Consumer Financial Protection Bureau says the companies that manage student loans have many similar problems that haunted mortgage servicers.
The CFPB’s private student loan ombudsman, Rohit Chopra, wrote the report based on nearly 3,000 borrower complaints and says he found an “uncanny” parallel to mortgages. Ninety-five percent of the complaints collected by the CFPB focused on problems triggered when students interact with servicers, which collect monthly payments on behalf of investors who own the loan. Chopra said borrowers often face surprises, runarounds, and dead ends—payments that aren’t properly applied, information that’s conflicting, and servicers unwilling or unresponsive to borrowers looking to create payment plans.
Source: Bloomberg Businessweek. Read full article. (link)