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Sallie Mae's Responsibility Before Default


ddeveaux
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Sorry I didn't find this forum before, might have saved lots of time! I had 8 loans with Sallie Mae (8 semesters of grad and undergrad). In 2001, I consolidated my loans. Evidently, some were Stafford and/or Perkins, whatever, but they could only be consolidated into 2 groups (Loan 1 and Loan 2 according to SM). According to Sallie, my acct number was my SSN. So for ~3 yrs, I wrote a check with my SSN at bottom. I thought all were consolidated so I only wrote 1 check. Sallie credited this check to Loan 1 entire time.

In 2004 a collection agency called about my defaulted loan?? Having no idea what they were talking about, I discovered that, according to SM, Loan 2 had never rec'd a payment...ever (5 yrs). Further, they claimed they couldnt' find me which is why I didn't hear about arrears or default. BUT I had been sending a check on Loan 1 during most of this time! So my complaint is primarily that they didn't do enough to notify me before going to default. (I read the law on that.) I disputed with SM who sent me and BBB list of all times they tried to reach me. (They included email which I don't see in law. The email address wasn't mine at that time.) BUT my main point here is I was sending a check to Ralph who was posting it to Loan 1 while Suzy at the next desk was "looking" for me to tell me about pending default! I also question why they posted entire check to Loan 1 every time and 0 to Loan 2.

I did participate in the deadbeat program and consolidated the default all while fighting this. The default is "gone" but my credit is a mess since it shows me at 180+ days for 4 loans for 5 yrs. Also effectively doubled what I owed. I'm at my wits end. I've written everyone I can find and can only think of filing a lawsuit if there are no other options. It can't hurt?? Help!

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I know this won't help ya, but SM's website clearly states that you have to write one check for each of the loans in many cases, a case as yours. I don't write this to pour salt on your wounds, but to make sure anyone else reading this doesn't end up with the same problem.

Now, if you do the autopayment, they dispurse the funds to the two loan accounts for you.

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I know this won't help ya, but SM's website clearly states that you have to write one check for each of the loans in many cases, a case as yours.

When I had five loans with them and wrote them one check, they always managed to credit the money correctly.

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Man, I just can't find it. Maybe I didn't see it on the website. Maybe I read it in some of the stuff they mailed. I know I read it somewhere. I'd think you could have some kind of case to have things fixed if you can prove what your minimum payment was supposed to be each month and prove that each month you made a payment of at least that amount to Sallie Mae.

Good luck!

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Thanks for replies. I'm primarily wondering if anyone is familiar with the law related to SM responsibilities to notify borrowers before default. Yes, I know its the borrowers responsibility, etc. but there is a specific law that outlines what a lender must do before default, which is there for a reason. I read it and it speaks of different forms of notification. Since I was paying Peter while Sallie was "trying" to notify me I don't feel they tried hard enough to locate me (my address was on checks I was sending in.)

Now that I saw 60 minutes and see that SM makes $$ either way, what incentive do they have to find me anyway? Thanks!

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Thanks for replies. I'm primarily wondering if anyone is familiar with the law related to SM responsibilities to notify borrowers before default. Yes, I know its the borrowers responsibility, etc. but there is a specific law that outlines what a lender must do before default, which is there for a reason. I read it and it speaks of different forms of notification. Since I was paying Peter while Sallie was "trying" to notify me I don't feel they tried hard enough to locate me (my address was on checks I was sending in.)

Now that I saw 60 minutes and see that SM makes $$ either way, what incentive do they have to find me anyway? Thanks!

The fact that your address is on a check means squat. Payments go to a payment processing center where they handle thousands of payments daily. Your check and your bill which has MICR endcoding on it are run thru a sorter and payments are posted automatically. Nobody is cross checking addresses.

SM would have been required to follow due dilligence prior to default. That means a certain amount of letters and call attempts were made. They must provide proof of these attempts when a default claim is processed. If mail was being returned, they would make a directory assistance attempt and would have attempted to call references. Since there are so many different divisions of SM, they are not required to search internally. It comes down to the making the required attempts and it being the borrowers responsibility to make sure that correct addresses are on all loans. SM biggest arguement is still going to be that you did not notify them that all loans had not been consolidated. Obviously if you were getting monthly statements to pay and return with those checks, you must have noticed that the balance was incorrect.

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One last question on this. (I actually wasn't receiving statements as the payments were setup automatically. So the statements were being returned to SM but I didn't even notice because I was just auto paying each month. I thought loans all were consolidated which is why notification wasn't made, but that's probably moot since they ended up not being consolidated.)

I understand the argument SM will make, but what aveneus to I have to challenge this? Letters to SM have been exhausted. Is there an arbitration or legal avenue I can take to let them decide? If one wanted to sue, where? Compounded is obviously that SM hasn't had loan in a few years since it went to default/collection/now new lender.

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I just pulled this off the Dispute page at the DOE

"You must make payments on your loan even if you do not receive a bill or repayment notice. Billing statements are sent to you as a convenience, and you are obligated to make payments even if you do not receive any notice from the holder of the loan. If you have not received any billing statements from us, you may not have properly notified the servicing agency of your current address."

Even though you made payments via auto debit,you still would have received a statement with the amount and loans listed on it when you consolidated. From what I am reading,you have no recourse. Only time will repair the damage now.

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