Several years ago, court systems all over the country were in turmoil because
of the home foreclosure crisis. First, courts got flooded with foreclosure
cases. After that, courts struggled to figure out what to do when banks
and other financial institutions were caught creating phony loan documents
to try and show they held the mortgages being foreclosed.
Just when those days were becoming a bad memory, an epidemic of lender
confusion has raised its head once more. This time, it’s in student
loan litigation. Lenders who have sued people for falling behind on their
student loans have run into the same problem as the foreclosure lenders:
they just can’t show they’re the party who is supposed to
receive the loan payments.
To understand how this happened again, you have to go back to how student
loans were bought and sold. Initially, the loans were usually held by
banks. As with mortgages, someone had the brilliant idea to bundle large
numbers of loans together and sell them to investors like stocks. The
idea was to lower the overall risk, because everyone assumed that only
a small number of the former college students in each bundle would actually default.
Unfortunately, through all the slicing and dicing and rebundling of loans,
the paperwork proving exactly who held each loan got lost in the shuffle.
When investors started suing people for failing to pay their loans, the
lawyers for those people asked for evidence that they really had the right
to collect. In an alarming number of cases, the lender plaintiffs just
couldn’t prove it. The cases ended up being dismissed.
By the way, asking for this kind of proof is not getting technical or gaming
the system. It’s a basic rule of law that the only person who can
sue you for a debt is the person who is actually owed that debt. A person
who pays a debt to the wrong person risks getting sued by the actual loan
holder later. There’s nothing wrong with verifying that the party
demanding money from you is actually the right one to do it.
Even though the parallels with the foreclosure crisis are striking, there
is one piece of good news. So far, the financial institutions suing people
for student loans have generally
not done what the banks did: create phony chain of title documents to support
their claims. Instead, they have taken their medicine when their legal
claims were properly challenged.
With literally millions of loans and billions of dollars at stake, the
temptation to manufacture supporting chain of title documents will become
enormous. Let’s hope the student loan investors won’t succumb
to the temptation to engage in fraud like the foreclosure lenders did.
About It’s debate time in the presidential election season. Beginning
on September 26th, the two major party candidates will hold three debates, with the third
being about one month later on October 19th.
There is good reason to be cynical about these debates. Presidential debates
were once put on by the League of Women Voters, but it walked away in
frustration during the campaign of 1988. The League could not stomach
the ground rules demanded from both major party candidates that year.
Its press release explaining its decision to quit did not mince words:
It has become clear to us that the candidates’ organizations aim
to add debates to their list of campaign-trail charades devoid of substance,
spontaneity and answers to tough questions. The League has no intention
of becomin an accessory to the hoodwinking of the American public.
During the same time period, the esteemed news anchor Walter Cronkite wrote,
“the debates are part of the unconscionable fraud that our political
campaigns have become.”
Things may be even worse now. For starters, don’t hold your breath
waiting for journalists to act as watchdogs. Chris Wallace, the Fox newsman
who will moderate the third debate, has said flatly that fact-checking
the candidates is not his job. It’s hard to imagine Lester Holt,
the affable NBC anchor who will moderate the first debate, mounting many
serious challenges either.
Anderson Cooper (CNN) and Martha Raddatz (ABC) may be more feisty in the
second debate. However, Donald Trump is already complaining that Cooper
will be unfair. Trump may really believe this, but it’s also possible
that he’s playing a calculated game. In sports, this game is known
as “working the refs.” It goes like this: a coach claims the
referees are biased and will call a game unfairly to his team. Two things
can then happen: (1) the referees feel the pressure, causing them to police
the other team even closer to preserve the appearance of fairness; or
(2) the refs don’t change their behavior, allowing the coach to
say afterward that his concerns about bias were proven true. Either way,
the coach wins.
If you feel it’s your civic duty to watch the debates despite this
depressing backdrop, here are four parting suggestions from a cross-examiner:
1) Watch for a candidate changing the subject instead of actually answering
the question, and think about why they might do that.
2) Not every question can be answered with a yes or no. But when a question
is simple enough to be answered that way, and the candidate still won’t
do it, consider that too.
3) Enjoy the zingers and one-liners, but remember that delivering one shouldn’t
allow a candidate to shut down debate on an important question.
4) Ask yourself whether something a candidate says is consistent with what
they’ve said in the past. Reasonable people can change their minds,
of course, but they should not just flip-flop to pander to the audience