Tag: student loan

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COVID-19: Impact on Consumer Financial Service Providers
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Webinar: Developments in Student Loan Servicing with Lessons Learned from Mortgage Servicing
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Increased Scrutiny On “Auto-Defaults”— Road To Enforcement Or Impetus For Change?
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CFPB to Supervise Nonbank Servicers of Student Loans

COVID-19: Impact on Consumer Financial Service Providers

A Summary of Federal and State Statutes, Rules and Orders

By David E. FialkowBrian M. Forbes, and Jeffrey S. Patterson

The coronavirus (“COVID-19”) pandemic has been and will continue to be a major business disrupter that will have a substantial impact on the consumer financial services industry in the weeks and months to come. Notably, federal, state and local governments and agencies are acting swiftly and changing the rules by which consumer financial services companies are to do business in the short and long term. K&L Gates LLP (“K&L Gates”) has developed a COVID-19 Task Force to closely monitor these developments and is tracking them in several jurisdictions across the firm’s footprint. Below is a summary, current as of March 30, 2020, of key new and proposed statutes, rules, and orders that are likely to impact consumer financial services companies. Keeping track of these almost daily developments to foreclosure, eviction, debt collection, student loans and other business lines, which vary state to state, is critical for consumer financial services companies to respond to their customers. As with previous nationwide crises, how these companies implement and apply these changes will have a substantial impact on post-pandemic compliance, litigation, and risks. K&L Gates has team members assigned to each of the states listed below who are able to help answer your questions and help companies address ongoing issues associated with the pandemic. Please click on a jurisdiction below for more information:

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Webinar: Developments in Student Loan Servicing with Lessons Learned from Mortgage Servicing

Please join us for a webinar on student loan servicing covering a wide range of developments in regulatory, enforcement and litigation as well as the practical application of lessons learned in parallel servicing industries.

Panelists:
David E. Fialkow, Partner, K&L Gates
Hollee M. Watson, Associate, K&L Gates

To register, click here. Log-in instructions will be sent via email the day before the webinar. You must register to receive the log-in instructions.

Increased Scrutiny On “Auto-Defaults”— Road To Enforcement Or Impetus For Change?

By: David E. Fialkow and Hollee M. Watson

Private student loan companies are at the center of increased scrutiny by the Consumer Financial Protection Bureau (the “CFPB”). Speaking at a recent conference, the CFPB student loan ombudsman Seth Frotman warned attendees that student loan companies are at risk of violating the law for placing borrowers in default when the co-signer of the loan dies or declares bankruptcy. See Danielle Douglas-Gabriel, Federal agency warns student loan companies about automatic defaults, The Washington Post (Mar. 8, 2016). This “auto-default” practice occurs when banks and other financial companies provide student borrowers with education loans that grant lenders or servicers the right to trigger a default upon a co-signer’s death or declaration of bankruptcy, even if the loan is paid on time.

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CFPB to Supervise Nonbank Servicers of Student Loans

By: Stephanie C. Robinson

On December 3, 2013, the CFPB issued a rule allowing the Bureau to supervise certain nonbank student loan servicers. Student loans represent the second-largest consumer debt market in the country after mortgage loans, and the two industries face similar problems. For instance, many consumers are seeking student loan modifications, just as many consumers are seeking mortgage loan modifications. In fact, the most common type of consumer complaint the CFPB has received about student loan servicing relates to borrowers trying to adjust their repayment terms in times of hardship. The CFPB estimates that 7 million student loan borrowers are in default on their debt. Read More

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