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Read NACBA’s Last Washington Update of 2017!

 

Take a moment to read NACBA’s last Washington Update of 2017! Stay informed about significant and relevant activity on the part of Congress, regulatory agencies and interest groups/think tanks.

ON THE HILL  Earlier this month, Congressman Tom Garrett (R-VA) introduced H.R.4584, the Student Security Act. H.R. 4584 is described as a completely voluntary program, that would empower borrowers who opt in to receive $550 in student loan forgiveness (or roughly the average cost for 1 credit hour at a public university) in exchange for raising a participant’s full-retirement age for Social Security benefits by 1 month with a maximum amount of $40,150 in debt relief and a corresponding 6 years, 1 month raise in retirement.

Two House Democrats sent letters on December 18th to four of the largest student loan servicing companies, seeking information about their policies and procedures for collecting. Reps. Emanuel Cleaver (D-MO) and Pramila Jayapal of (D-WA) say they’re concerned about “the rising rate of student loan defaults and continuous claims of fraudulent practices in lending, servicing, and collecting” of student loans. The two lawmakers urged the companies to take steps to improve customer service and focus more attention on “high risk” borrowers. Read the letters they sent to the leaders of Navient, Nelnet, Great Lakes and FedLoan Servicing.

On Wednesday, December 13th House Republicans passed a partisan revision of the Higher Education Act that would restructure federal student loans and reduce accessibility to higher education by limiting financial aid options. The bill consolidates the six current federal student loans into three and removes the Graduate PLUS and Parent PLUS loan options. PLUS loans offer no limit and cover the entirety of the institution’s cost of attendance. Under the House’s revision, all federal loans would have maximums, with annual and lifetime loan caps.

IN THE AGENCIES The Education Department announced Wednesday, December 20th a reversal of the Obama administration policy of wiping out student debt. This means that students who were defrauded by the for-profit Corinthian Colleges may not get their loans forgiven entirely. Under President Barack Obama, tens of thousands of students deceived by the now-defunct schools had more than $550 million in federal student loans canceled in full. But Education Secretary Betsy DeVos announced Wednesday she is putting a new process in place that she says is more efficient and fair. The department will now look at average income for specific programs to determine if the loans should be forgiven fully or partially.

California Attorney General Xavier Becerra filed a lawsuit on December 14th against the U.S. Department of Education and its Secretary, Betsy DeVos, for refusing to process debt relief claims submitted by tens of thousands of students who took out federal student loans to attend Corinthian Colleges, Inc. (Corinthian). Students became eligible to apply for this relief after the courts found that Corinthian defrauded these students in violation of California consumer protection laws. More than 1 in 4 of those students with pending debt relief claims resided in California.

FROM THE INTEREST GROUPS Americans for Financial Reform (AFR) strongly condemns the Department of Education’s announcement that they have denied relief to 8,600 borrowers who applied for debt discharges through borrower defense to repayment. The Department has not specified—but must immediately supply—the reasons for those denials, and how many of them came from Corinthian or ITT, schools that closed under the weight of their own illegal and abusive acts. “The news of the Department’s scheme to grant only partial relief to scammed students is just one more piece of an abundance of evidence that the Trump Administration and the DeVos Department of Education care more for the proprietary institutions that break the law than they do for the students they defraud,” said Alexis Goldstein, Senior Policy Analyst at Americans for a Financial Reform. “For Secretary DeVos, it’s predatory companies first, students last.”

 

Feedback should be directed to Krista.DAmelio@NACBA.com

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NACBA’s Washington Update

Krista D’Amelio, NACBA’s Director of Government Affairs & Communication gives you the lastest and  most significant and relevant activity on the part of Congress, regulatory agencies and interest groups/think tanks in this week’s Washington Update.

On The Hill On June 8 the House Subcommittee on Regulatory Reform, Commercial and Antitrust Law held a hearing titled “A Time to Reform: Oversight of the Activities of the Justice Department’s Civil, Tax and Environment and Natural Resources Divisions and the U.S. Trustee Program”. The hearing hear testimony from two witness panels. The first witness panel included: Clifford White III, Director of the U.S. Trustee Program, David Hubbert, Acting Assistant Attorney General Tax Division, Jeffrey Wood, Acting Assistant Attorney General Environment and Natural Resources Division, and Chad Readler, Acting Assistant Attorney General Civil Division. The second witness panel included President of Public Citizen Robert Weissman, Esq., Partner of Baker & Hostetler LLP Andrew Grossman, Esq., Partner of Foley and Lardner LLP Cleta Mitchell, Esq., and Manager of Election Law Reform Initiative, Senior Legal Fellow at the Heritage Foundation Hans von Spakovsky, Esq. In his testimony, Director Clifford White provided the Subcommittee an update on the facts and observations of the Trustee Program and highlighted matters of special importance to the bankruptcy system. Members of NACBA’s Legislative Committee submitted questions to the Subcommittee at the request of the House Judiciary Committee.

Senator Jack Reed (D-RI) and Senator Sherrod Brown (D-OH) reintroduced the Military Consumer Enforcement Act, S. 1389, on June 21st. The bill would allow the Bureau of Consumer Financial Protection to provide greater protection to servicemembers.The bill’s other co-sponsors include: Sens. Jon Tester (D-MT), Richard Blumenthal (D-CT), Tim Kaine (D-VA), Tammy Duckworth (D-IL.), Elizabeth Warren (D-MA), Tammy Baldwin (D-WI), Al Franken (D-MN), Amy Klobuchar (D-MN), Chris Van Hollen (D-MD) and Catherine Cortez-Masto (D-NV).

IN THE AGENCIES On Tuesday, June 20th U.S. Secretary of Education Betsy DeVos appointed A. Wayne Johnson, a former executive in the financial-services industry, to run the $1.3 trillion federal student loan portfolio. The position of chief operating officer of federal student aid has been vacant since May when James W. Runcie resigned, saying he couldn’t in “good conscience” lead the agency while it was facing rising scrutiny from the Trump administration about its management of the lending programs. Dr. Johnson worked in senior management at Visa and Deloitte before starting his own company, which captures credit-card transactions in real time and alerts card holders to better manage their accounts.

FROM THE INTEREST GROUPS Americans for Financial Reform and National Consumer Law Center issued separate statements on June 14th that condemns the decision of Education Secretary Betsy DeVos to abandon the victims of predatory colleges by delaying the update to the Borrower Defense rule, and creating two new negotiated rulemakings to re-do and likely dismantle both the Borrower Defense and Gainful Employment rules.

OTHER A recent Consumer Report analysis found the Affordable Care Act (ACA) to be a major reason for the decline in personal bankruptcy filings. The report reveals that since 2010, personal bankruptcy filings have dropped by about 50%. Experts say some of that is due to an improved economy and laws passed in 2005 that make it harder to declare bankruptcy. CR’s reporting found that the ACA’s provisions for mandatory coverage of pre-existing conditions and against annual and lifetime payout caps has helped consumers —especially Americans with serious medical issues— avoid bankruptcy.

Stay Updated With NACBA!

Bankruptcy News Briefs 11/8

What’s Making Headlines Today?

nacbapicture

Department of Education Releases Student Loan Servicing Requirements

Report: Growing Personal Loan Balances Fuel Consumer Credit Markets

Debt Collector Wins Summary Judgment in 11th Circuit Envelope Case with Spokeo Assist

Fla. App. Court Holds FCCPA’s Notice of Assignment Requirement Applies to Mortgagees, But Not Condition Precedent to Foreclosure

District Court Oversteps on Issue of Sovereign Immunity in Section 362

Department of Education Adopts Rules Increasing Student Loan Risk for Schools

Could the election stall progress on student loan debt relief?

The Ninth Circuit Holds That Enforcing A Security Interest Is Not Necessarily Debt Collection

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6 Key Numbers Every Bankruptcy Attorney Must Know

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Washington Update VI

Get Caught Up on What’s Happening In Washington! Read Today’s Washington Update VI

This is the latest issue of our weekly update from Washington, designed to keep NACBA members informed about significant and relevant activity on the part of Congress, regulatory agencies and interest groups/think tanks.

ON THE HILL Wells Fargo settled with regulators for $185 million after its employees were found to have opened some 1.5 million bank accounts and applied for almost 600,000 credit cards that may not have been authorized by customers, but as promised, the Senate investigation continues.  Senators Warren, Sanders, Markey and Hirono sent a letter to accounting firm KPMG asking for an explanation as to why its audits of Wells Fargo failed to uncover the cross-selling misconduct.  The senators asked KPMG a series of questions, including whether the firm has faced disciplinary action from the Public Company Accounting Oversight Board (PCAOB) related to Wells Fargo audits. KPMG has until Nov. 28 to reply.

The special inspector general for the Troubled Asset Relief Program (TARP) is proposing to make it easier to charge bank executives when fraudulent activity occurs at their institution.  Christy Goldsmith Romero, in SIGTARP’s quarterly report to Congress, recommends that Congress require senior bank officials to sign an annual certification that they have done their due diligence to determine that there is no criminal conduct or civil fraud happening at their institution.

The White House called on Congress to rethink its approach to rebuilding the hobbled mortgage market and offered, for the first time, a set of principles for housing reform.

Affordability and access to credit, especially for middle-income Americans and minorities, must provide the foundation of any new system, the White House said. The White House went on to say that revamping the arcane infrastructure of the global mortgage market, which has challenged policymakers since the 2008 housing collapse, should take a backseat.  The request is laid out by Treasury advisers Antonio Weiss and Karen Dynan and can be read here.

IN THE AGENCIES  In a speech given at a major payments and financial technology industry conference (Money 20/20) in Las Vegas, Consumer Financial Protection Bureau (CFPB) Director Richard Cordray called for consumers to have more control over their financial data.  “Consumers should be able to access this information and give their permission for third-party companies to access this information as well.” The CFPB director added that his bureau is “gravely concerned by reports that some financial institutions are looking for ways to limit, or even shut off, access to financial data rather than exploring ways to make sure that such access, once granted, is safe and secure.”  You can read Director Cordray’s speech here.

Director Cordray also delivered remarks at the Consumer Advisory Board meeting in Washington, DC.  His remarks addressed the issues people encounter when they are paying back debt, and more specifically, the debt collection market and the student loan servicing market.  You can read his remarks here.

The U.S. Department of Education announced final regulations to protect student borrowers against misleading and predatory practices by postsecondary institutions and clarify a process for loan forgiveness in cases of institutional misconduct.  Read the full press release from the Department of Education here.  Reaction to the new regulations is unfolding, with at least one publication (Bloomberg analysis) suggesting that the new regulations will make seeking student debt relief more difficult.

FROM THE INTEREST GROUPS  In a letter to the CFPB, the Consumer Bankers Association (CBA) told regulators that its members have changed or are changing contracts for private student-loan customers to ensure that loans in good standing aren’t placed in default because a co-signer has died or filed for bankruptcy.  The changes address the regulators’ criticism of the banks’ practice known as “auto-defaults.” The system causes surprise defaults for borrowers when the status of co-signers changes even when the borrowers’ themselves have met their payment obligations.  You can read the CBA’s press release here.

The Mortgage Bankers Association has stepped up political pressure for housing reform.  The group will launch an inside-the-beltway campaign in January to promote the stability and transparency of the home loan industry.  They also will call on the incoming president to appoint a housing director to coordinate policy across multiple agencies and local state and federal governments. “Someone who works in the White House, someone with the authority of a direct report to the new president,” MBA President David Stevens said in a speech at the group’s annual meeting in Boston. “It’s the only way to untangle the confusion and imbalances. It’s the only way to avoid the housing crisis to come.”

Read all the Washington Updates in NACBA News