Friday, August 29, 2014
YOLO COUNTY NEWS
99 CENTS

Sallie Mae accused of overcharging military personnel on student loans

By
From page A3 | August 16, 2013 |

By Richard Pérez-Peña

Federal regulators plan to accuse Sallie Mae, the giant student lending corporation, of charging military personnel excessive interest on student loans, and the government is looking into similar allegations against other lenders.

Sallie Mae revealed the pending action against it last week in its quarterly earnings report, stating that the Federal Deposit Insurance Corporation warned in July that it planned to take “new formal enforcement action” against the lender. Both corporations declined to describe the allegations, but Sallie Mae said they would deal in part with the Servicemembers Civil Relief Act.

That law caps interest on loans to military personnel at 6 percent, along with providing protections against default judgments and garnishments, and a person briefed on the matter said compliance with the 6 percent limit would be a key part of the FDIC action. Under the law, if a person borrows money at a higher rate and then enters the military and requests a lower rate, the lender must reduce the rate to 6 percent, and forgive any interest above that level.

“We’ve invested a lot in our compliance efforts, but we understand some concerns persist, and we realize that the bar is getting higher,” said Martha Holler, a Sallie Mae spokeswoman, adding that the corporation is “open to our regulator’s recommendations for improvement.” In recent months, Sallie Mae has created a Web site specifically for military personnel, and has taken other steps to notify them of their legal rights regarding student loans.

In enforcing the 6 percent rule and other credit protections for service members, the government has focused primarily on mortgage borrowing. In the last three years, the Justice Department and the states have reached several settlements with banks, directing billions of dollars in payments to service members, some of whom had lost their homes, and subjecting new foreclosure actions to more scrutiny.

In October, the government’s new Consumer Financial Protection Bureau identified improper student lending as “the next front” in protecting service members financially.

And in a July 31 hearing of the Senate Committee on Veterans Affairs, when asked about predatory student lending, a Justice Department official said that the department was looking into some of the same kinds of violations as the FDIC.

“We are concerned with loans that are taken out while not on active duty, and then when someone becomes activated, whether they get the full benefits of the 6 percent reduction when they request it,” said Eric Halperin, special counsel for fair lending in the Civil Rights Division.

“And we do have active investigations in that area, looking into a failure to provide servicemembers the full benefits,” Halperin added.

Sallie Mae said that in addition to the law protecting service members, the FDIC action would deal with the Equal Credit Opportunity Act, which prohibits discriminatory lending. But that law addresses many bases for discrimination, like race and whether a borrower is on public assistance, and neither Sallie Mae nor the FDIC would say what kind of discrimination would be alleged.

Sallie Mae began four decades ago as a government-sponsored enterprise, like the mortgage lenders Fannie Mae and Freddie Mac, but has been independent since the end of 2004. It lists as its primary assets $145.6 billion in student loans. The company also acts as a servicer and collector for loans made by banks and the federal government.

The FDIC primarily oversees local and regional banks, not major national institutions, but Sallie Mae comes under its jurisdiction because of the role of its Utah-based arm, Sallie Mae Bank, which provides banking services directly to consumers and is an FDIC member.

Comments

comments

New York Times News Service

.

News

Saving Putah Creek: a quiet concert at sunset

By Elizabeth Case | From Page: A1 | Gallery

 
Mr. Dolcini goes to Washington

By Tanya Perez | From Page: A1 | Gallery

Winton to be feted for her many years of community work

By Bruce Gallaudet | From Page: A1 | Gallery

 
Davis Innovation Center team fields questions

By Dave Ryan | From Page: A1 | Gallery

Researchers solve mystery of Death Valley’s moving rocks

By The Associated Press | From Page: A2 | Gallery

 
California extends review of $25B delta plan

By The Associated Press | From Page: A2

 
Assembly approves statewide ban on plastic bags

By The Associated Press | From Page: A2

Celebrate the Senior Center at Sept. 9 luncheon

By Enterprise staff | From Page: A3

 
Need a new best friend?

By Enterprise staff | From Page: A3 | Gallery

Equestrian eventing competition slated

By Enterprise staff | From Page: A3

 
Dinner, auction benefit Yolo County CASA

By Enterprise staff | From Page: A3

Forum explores local mental health services

By Enterprise staff | From Page: A3

 
Solar-cooking workshop set at Food Co-op

By Enterprise staff | From Page: A3

Kids can sign up for a library card and get a free book

By Special to The Enterprise | From Page: A4

 
Explorit Science Center: Volunteers supercharge summer camp

By Lisa Justice | From Page: A4 | Gallery

Tee off for Davis’ continued prosperity

By Lily Holmes | From Page: A4

 
 
Bodega Marine Laboratory hosts open house

By Special to The Enterprise | From Page: A5 | Gallery

Local group charts a year’s worth of beauty in flowers

By Enterprise staff | From Page: A5

 
Free blood pressure screenings offered

By Enterprise staff | From Page: A5

Name Droppers: UCD honors two of its own

By Enterprise staff | From Page: A6

 
Books, conversation and poetry at Logos

By Enterprise staff | From Page: A7

 
.

Forum

Let’s sell the MRAP on eBay

By Letters to the Editor | From Page: C2

 
Seeing both sides of ‘tank’

By Letters to the Editor | From Page: C2

What if we need MRAP?

By Letters to the Editor | From Page: C2

 
How could tank be helpful?

By Letters to the Editor | From Page: C2

 
Tom Meyer cartoon

By Debbie Davis | From Page: C2

Don’t sentence our police to death

By Special to The Enterprise | From Page: C2, 1 Comment

 
Will Davis see river water?

By Letters to the Editor | From Page: C2

Travel buddy is getting too fat

By Creators Syndicate | From Page: B5

 
.

Sports

Forget the score; focus on the energy brought by Aggies

By Bruce Gallaudet | From Page: B1

 
Returning seniors, new faces lead promising DHS links squad

By Evan Ream | From Page: B1 | Gallery

Devil golfers return from Scotland with smiles on their faces

By Evan Ream | From Page: B1 | Gallery

 
Devils scrimmage with Sac

By Wayne Tilcock | From Page: B1 | Gallery

UCD-Stanford: the clock is down to counting the minutes

By Bruce Gallaudet | From Page: B1

 
Wire briefs: Aces cruise past Cats at Raley

By Wire and staff reports | From Page: B6

Sports briefs: DHS girls fall by the slimmest of net margins

By Enterprise staff | From Page: B6 | Gallery

 
.

Features

.

Arts

‘The November Man’: Who can be trusted?

By Derrick Bang | From Page: A9 | Gallery

 
B Street’s ‘The Ladies Foursome’ is aces

By Bev Sykes | From Page: A9 | Gallery

.

Business

Technology makes a great car better

By Ali Arsham | From Page: C1 | Gallery

 
.

Obituaries

Elaine Dracia Greenberg

By Special to The Enterprise | From Page: A4

 
Margarita Elizondo

By Special to The Enterprise | From Page: A4

.

Comics