Student Loan Creditor, Fined for ‘False’ Lawsuits, Must Halt Collections<br />In Monday’s settlement with the Consumer Financial Protection Bureau, the trusts agreed to pay nearly $19 million in penalties<br />and borrower refunds — and could be on the hook for millions in additional payments and forgiven loans.<br />The insurance company Ambac, which has hundreds of millions of dollars of exposure to National Collegiate’s securities through insurance it sold to investors, warned last month in a regulatory filing<br />that it might need to set aside an additional $200 million to cover losses on its student loan portfolios.<br />The creditor, the National Collegiate Student Loan Trusts, holds $12 billion in student loans that were originally made by banks.<br />As part of the $19 million pact, National Collegiate agreed to set aside $3.5 million for refunds to 2,000 borrowers.<br />The audit will allow us to figure out the scope, come up with a compliance plan and make the changes that need to be made.”<br />Mr. Uderitz has been locked in a legal dispute with other companies involved in operating the National Collegiate trusts.<br />Those borrowers had made payments after being sued over loans<br />that were legally uncollectable, either because the statute of limitations had passed or because National Collegiate lacked the documentation needed to collect the debts in court.
