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CFPB’s Semi-Annual Report Contains Some, But Not Much, Information About Debt Collection

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On October 8, the Consumer Financial Protection Bureau (CFPB or Bureau) published is Semi-Annual Report for Spring 2019, which covers the period between October 1, 2018, and March 31, 2019. While there has been a lot of debt collection related activity at the Bureau recently, the report—covering a time period prior to the release of the Notice of Proposed Rulemaking for debt collection—makes only a few mentions of debt collection practices.

Below are two areas of interest from the report regarding debt collection.

Credit Reporting Complaints Far Surpass Debt Collection Complaints

The report contains a snapshot of complaints received by the Bureau through its complaint portal as well as complaints forwarded to the Bureau from other regulators. The complaint snapshot reporting period, covering April 1, 2018, through March 31, 2019, is slightly longer than that of the Semi-Annual Report. In this time frame, the Bureau received 321,200 complaints, which is a 2% decrease from the prior reporting period. Companies had a 95% response rate for the complaints that the Bureau forwarded for review and response.

Most notably, credit reporting complaints are noted as the clear frontrunner, making up 39% of the consumer complaints—compared to 24% for debt collection complaints.

Editor’s Note: Previously, insideARM wrote about how certain credit repair organizations are flooding debt collectors with mass disputes and how a jury found one credit repair organization liable of fraud in relation to such practices. Through communication with industry members, it is believed that credit repair organization might also be flooding the CFPB complaint portal with similar disputes. 

Bureau Enforcement Actions Related to Debt Collection Practices

The only other area of the report that makes substantial mention of debt collection is the section outlining the Bureau’s enforcement activities. Below are a few of the actions mentioned, including the alleged problematic practices.

In re CMM/Cash Tyme (File No. 2019-BCP-0004): Making collection calls to third parties that risked disclosing information about debts. See insideARM article about the settlement of this matter here

In re Cash Express, LLC (File No. 2018-CFPB-0007): Collection letters threatening to take legal actions on time-barred debts despite the company policies against filing lawsuits on such accounts. Also, misrepresenting that the company might report negative information to the credit bureaus regarding late or missed payments when the company did not actually report this information. See the consent order here

In re Bluestem Brands, Inc. (File No. 2018-BCFP-0006): Delaying consumer payment transfers to debt buyers, causing consumers to undergo collection activity on accounts that are already paid. See insideARM article about the consent order here

In re National Credit Adjusters, LLC (File No. 2018-BCFP-0004): Using a network of debt collectors who represented to consumers that they owed more than they actually did and threatening consumers with visits by process servers and arrest. See the consent order here.

In re Security Group Inc. (File No. 2018-CFPB-0002): In-person collection visits where consumers were physically blocked from leaving their homes, and placing collection calls to consumer’s workplaces and references. See the consent order here

[Note: While not related to debt collection practices, the enforcement action against Freedom Debt Relief is also of interest to the industry, so it is included below.]

In re Freedom Debt Relief, LLC (N.D. Cal., Case No. 15-cv-6484): Debt relief company that allegedly misled consumers about its ability to negotiate settlements and charging consumers without settling debts as promised. See the consent order here

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insideARM Perspective

While this report has only several mentions of debt collection, it is anticipated that the next semi-annual report—which will cover a period including the release of the NPRM as well as the comment period—will contain significantly more information. It is also encouraging to see that debt collection complaints are declining. With that said, debt collectors and creditors who furnish data to the credit bureaus should be aware that the Bureau might be honing in on credit reporting. Not only is it now the most complained about “product,” but credit reporting was also front-and-center in the Bureau’s most recent Supervisory Highlights.



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Are Sallie Mae Student Loans Federal or Private?

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When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

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Tips to do some fall cleaning on your finances

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Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

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How to Get a Loan Even with Bad Credit

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Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.

 

 

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