Posted by David Alexander on May 27, 1999 at 11:24:49:
I guess my point would that if your buying paper where they were already defaulting or defaulted, then why would they secure it, even if they could. Like you said be better to hear John’s opinion on this one.
I can see converting this collateral for that collateral, or getting different collateral in the beginning for a newly created note. I’ll sit back and listen and learn.
David Alexander
Student Loan Purchases - Posted by Rich[FL/GA]
Posted by Rich[FL/GA] on May 26, 1999 at 18:12:11:
John, have you ever looked into the subject of purchasing student loans at a discount? What are some of the unique problems that need to be examined? etc??
The reason I was wondering was a few days ago my wife, who works at Sallie Mae in Panama City, FL told me they were having to look carefully to pick through the lendor’s portfolio of student loans to weed through the many that are slow or non-performing. I’ve asked her to look into what it would take to get some of the information about these loans, like who has them we could talk to, in case an opportunity like this would be too good to pass up.
Thanks for your thoughts…
Rich
Collections Challenge - Posted by John Behle
Posted by John Behle on May 27, 1999 at 13:17:41:
There can be money made in defaulted loans - but it takes a very experienced and agressive collections effort.
Student loans are notorious for being poor in collections. Some collections agencies make great profits off of defaulted loans they buy from banks, etc. I would not recommend it for someone who is not a seasoned, experienced and agressives collections professional.
Where I am at… - Posted by Sean
Posted by Sean on May 27, 1999 at 11:40:13:
Student loans are guaranteed by the State of California and in the event of default the lender just turns the loan over to the state for collection.
Re: Student Loan Purchases - Posted by David Alexander
Posted by David Alexander on May 27, 1999 at 01:02:28:
Are Student Loans Secured? What happens in case of total default?
David Alexander
Re: Student Loan Purchases - Posted by Rich[FL/GA]
Posted by Rich[FL/GA] on May 27, 1999 at 07:54:11:
David, good questions. That’s what I hope to find out here. I don’t think they’re secured (trying to remember from my old student loan days) but was wondering if there was a way they could be secured once purchased.
One idea I was thinking of was based on getting a loan at deeply discounted rates (pennies on the doller?) Negotiate with payee for a performance mortgage on their house (if they have one) for a reduction in principle owed, lower interest rate, or maybe something else (re-structure the terms of the note). That way it could become secured. I’m sure John has many other ideas on re-structuring notes like these. This is similar to Bronchick’s ideas used to secure a L/O with a questionable seller. Of course, this depends on the wording in the original student loan paperwork (I think).
I’m still too new and green at this to have any answers yet. Not even sure yet where to go to research some of these answers. That’s why I’m asking the questions here.
I know there’s a lot of people out there chasing different kinds of paper but have never heard of anyone looking into student loans. This idea sort of hit me when my wife told me what was going on where she works at Sallie Mae. I was thinking it might be an opportunity. If you find any more information about these I’d appreciate it if you’d pass it along here or through email. I’ll do the same. Maybe we can all benefit!
Re: Student Loan Purchases - Posted by Carmen
Posted by Carmen on June 10, 1999 at 11:00:47:
Having several student loans (myself and husband), I don’t think that they EVER fall off your credit! I’ve got student loans I’ll be paying on until I’m in my 50s! And they are the one loan I make sure I pay. They are not secured per se (no collateral), but the ones I have are government guaranteed, so like taxes, they can come after you any time. You can’t even bankrupt out of them - they seem to be the roaches of the loan world (survive anything).
I know several people who defaulted on their student loans in their younger days, but who now need to be responsible adults and buy cars, homes, etc. If these loans remain on their credit, that is difficult to do. They may be motivated to settle on them in order to move on.
I know my loans have not ever been sold that I know of - the oldest is 10 years old - I still pay the same company that originated them. Unless, of course, they have been sold and the company is just servicing them, I’m not sure how I would know that. So I’m not sure whether they can be bought - let us know.