Hundreds of thousands of Americans in debt from the worst batch of student loans Wall Street ever bundled could see their balances cut under a tentative agreement the feds have struck with a little-known firm that effectively owns more than $8 billion in securitized student debt.
The tentative deal, which has not yet been finalized, would resolve a years-long investigation by the CFPB into consumer lawyers' allegations that debt collectors for the 15 trusts that hold that debt have flooded courts with sloppy lawsuits against tens of thousands of borrowers accused of having defaulted.
Those trusts, the National Collegiate Student Loan Trusts, are collectively one of the nation's largest owners of private student debt. Their preliminary settlement with the CFPB was reached by their ultimate owner, VCG Securities LLC, a Florida-based investment firm led by Donald Uderitz. If finalized, it would require the payment of "large sums" in restitution to borrowers and civil penalties to the U.S. government, according to a summary of the proposal filed in a separate court case.
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