According to the Federal Register, student loans are securitized which means that student loans were sold or are pooled with other student loans endorsed into a trust. These trusts are called asset backed securities.
Asset Backed Securities collateralized by student loans (“SLABS”) comprise one of the four (along with home equity loans, auto loans and credit card receivables) core asset classes financed through asset-backed securitizations and are a benchmark subsector for most floating rate indices. Federal Family Education Loan Program (FFELP) loans are the most common form of student loans and are guaranteed by the U.S. Department of Education ("DOE") at rates ranging from 95%-98% (if the student loan is serviced by a servicer designated as an "exceptional performer" by the Department Of Education the reimbursement rate was up to 100%). As a result, performance (other than high cohort default rates in the late 1980s) has historically been very good and investors’ rate of return has been excellent. The College Cost Reduction and Access Act became effective on October 1, 2007 and significantly changed the economics for FFELP loans; lender special allowance payments were reduced, the exceptional performer designation was revoked, lender insurance rates were reduced, and the lender paid origination fees were doubled. See: Wikipedia
According to SEC rules student loans are supposed to be transferred into a trust; however they never actually deliver the note. If the note is NOT indorsed into the trust the note is void and uncollectable.
So what are they securitizing?
They are securitizing a COPY of that note.
All notes securitized by a transfer of the "borrower's" or grantor is void and uncollectible. Also, securitization of a COPY of the note is a violation of the Uniform Commercial Code Article 9. If the note is not endorsed into the trust the note is void and uncollectable.
Student loan debt collectors violate the Fair Debt collection Practices Act because they threaten to take you to court and they have no intentions of doing so. In some cases this violation is worth $1,000.00 fine.
The Student Loan Contract
Student loans are governed by the United States Office of Education.
Most student loan borrowers will have the original contract in their possession because when they got these loans they got these documents and they faxed a copy on the contract to the loan broker so the company does not have the original. But in the contract it says that they don’t have it (and they know that) and that you agree to the terms and conditions by holding on to the original note
Student Loan Consolidation Store needs to send Student Loan contract documents and debt collection letter and a copy of your last monthly statement.
Administrative Process to Cancel Default Student Loan
I have yet to see where any money was used by the department of education that actually funded any loan and that’s what they say on these loans “your loan was funded by the Department of Education” when it wasn’t. It was funded by private investors, as a student loan security.
You my want to call me for more information about wiping out your default student loan.
See letter from Sally Mae showing student loan default removed from credit report by my administrative process. Letter