Fighting Student Loan Debt

July 8, 2009

By Angie Moreschi:

College students struggling with overwhelming debt from student loans are getting support from some major players.  Click here to watch the video and learn more below.

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Have the Banks Gone Crazy? Wells Fargo Sues Itself

July 2, 2009

By Angie Moreschi:

We’ve apparently reached the perfect storm for complete and utter idiocy by some banks trying to foreclose on homes.  Wells Fargo is now suing itself in order to foreclose on a property in Tampa, FL.  Sounds crazy, but it’s true.  Click on the video above to hear the story and read more about this story below.

Dow Jones Newswire and FOX Business News Commentator Al Lewis picked up on our story and also had a little fun with it.  Click here to read his report.

The Foreclosure Process Run Amok

By Angie Moreschi:

Sarasota Foreclosure Attorney, Dan McKillop, who represents the homeowner, recently brought the case to our attention.    “Wells Fargo sued itself, said McKillop. “Then, Wells Fargo went out and hired a defense attorney to go ahead and defend against themselves.”

McKillop says this is the 5th or 6th time he’s seen a mortgage company do this.  In addition to Wells Fargo, he’s now handling another case where SunTrust Bank is suing itself.

It happens when the lender holds both the first and second mortgage.  Essentially, he says it’s a way for the lender to avoid paperwork, push through the foreclosure and sell the property faster.  Or he says, perhaps they don’t even realize what they’re doing, which is even more ridiculous.

“The banks don’t take the time to properly file complaints.  The same way they didn’t take the time to look at any of the homeowners info.  The same way they didn’t take the time to properly assign the notes and mortgages.  So, we’re basically in that process now, but it’s the plaintiff’s attorneys who are trying to push through these foreclosures as fast as possible.”

“You can’t help but laugh,” McKillop added. “At the very least, you understand nobody else knows what they’re doing.”

We contacted Wells Fargo to get a comment about this seemingly unusual practice.  The company’s Communications Manager, Kevin Waetke, responded in an email saying he was “not familiar with this practice.”  He added, “Are you inquiring about a specific case, or simply a policy perspective from a servicer?  In that regard, we have nothing to contribute…”

We are following up with Wells Fargo and will update you if they are able to provide a comment with more explanation.

UPDATE: 7/3/09, Wells Fargo Communications Manager Kevin Waetke provided this statement to further explain why the company sues itself in some foreclosure cases:

“Due to state foreclosure laws, lenders are obligated to name and notify subordinate lien holders — as well as all parties with an interest in a property — as a property moves through the foreclosure process. The primary reason is to clear title and ownership interest in a property to prepare it for sale.”

Attorney McKillop explains that to avoid suing itself a lender would typically release the lien against the property after the foreclosure goes through. By suing itself, the company avoids the step of having to file that additional paperwork.  That, in effect, speeds up the time it takes to sell the property after foreclosing.

McKillop says it’s frustrating to see companies more interested in accelerating the sale of foreclosed properties rather than working with homeowners to stay in their homes.

Help for Students Struggling to make Loan Payments

July 1, 2009

By Nicole Mayer:

The government just unveiled an Income-Based Repayment plan to help those federal student loan borrowers struggling to make student loan payments.

The new plan allows those in repayment to tailor their payments based on income and family size.  For most eligible borrowers, the plan will cap payments at 10% of a person’s income, and even less for those with lower earnings and larger families.

To be eligible under the Program, you must have either Direct Loans, FFELP Loans, Grad PLUS loans or a consolidation loan made under any of these federal programs.  You must also have enough debt relative to your income to qualify for a reduced payment.  You may be eligible if your federal student loan debt is high relative to your family size and income.

The Plan uses a sliding scale to determine payments.  For example, if you earn below 150% of the poverty level for your family size, your required loan payment is $0.  If you earn more, your loan payment will be capped at 15% of whatever you earn above that amount.  To make things more clear, the Federal Office of Student Aid has provided a calculator to help you determine your eligibility and payment amount.

A married person who files a tax return as “married filing separately” is permitted to only count the borrower’s adjusted gross income and student loan debt.  This allows the borrower to exclude the income of his or her higher earning spouse when calculating the cap on monthly payments.

What is slightly unclear is how the calculation is done for married persons filing jointly who both have student loan debt. When the Consumer Warning Network contacted the Federal Office of Student Aid, we were directed to “contact your lender” for additional details.

If you choose to participate in the Plan, you will need to contact your lender, who will help you determine your actual payment.  You will also be required to submit annual documentation regarding your income and family size.

After 25 years of qualifying payments, the remaining federal student loan debt can be forgiven.  There are also additional benefits to the program, including the possibility of loan forgiveness after ten years of public service for those with Direct Loans. If you have a different type of federal loan, you may be able to consolidate those loans into the Direct Loan Program so that you can take advantage of the Public Service Loan Forgiveness Program.

For additional information, visit the Office of Federal Student Aid’s website which explains the Income Based Repayment Plan.

**We’d like to hear about your efforts to participate in the program. Please send us an email telling us about your experience.

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