Deja Vu for Homeowners: 5 Flaws That Kill Student Loan Collection Lawsuits

With the same false claims of securitization of student debt as purported mortgage loans it is apparent that the courts are treating students differently from homeowners. Although the defenses are identical students are gaining much more traction in collection suits than their counterparts who are battling foreclosure.

The article cited below appeared in the New York Times. It spells out the defenses that work for students defending collection suits on their student loans. Each one is the same as the proper defense of a foreclosure:

  1. The “creditor” cannot prove that it owns the debt. (Quote marks added)
  2. The “creditor’s” business records are not admissible.(Quote marks added)
  3. The debt is beyond the statute of limitations for collection.
  4. The “creditor” is not licensed to do business in the jurisdiction.
  5. The “creditor” failed to comply with court requests for additional information.

And all that means is that the “creditor” is not a creditor. It is a party claiming to be a creditor when they are not. And just to be even more specific, the salesman of the loan and any purport successors does NOT have any contractual relationship or duty owed to the investors whose money is being spent for the sole purpose of creating paper than can be sold dozens of times.

DEATH OF A SALESMAN: Most of these issues dovetail into the subject covered in my upcoming mini-seminar at

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As I have pointed out before, the issue of wrongful foreclosures is closely linked with the issue of wrongful collection of student loans. The interesting point of all this is that the courts seem to have a schizoid view of the application of the law.

If you are student contesting the right to collect in a private student loan situation, and you raise the defense or objection that the so-called “collector” has no ownership or agency right over the disputed debt, the court is likely to allow you to press the point — requiring the “collector” to first prove that they have ownership of the debt.

BUT if you are homeowner contesting the right to collect on a putative mortgage loan situation, and you raise the defense or objection that the so-called “collector” has no ownership or agency right over the disputed debt, the court is likely to resist thus inventing a legal presumption that the paper is enough to raise the presumption that the holder of the paper is the owner of the debt.

Worse, the courts continue to confuse the paper over the reality or unreality of any transaction by fuzzy thinking about the very real distinctions between a debt, a promissory note and a mortgage or deed of trust.

But if you start following the case law concerning defense of student loan collection suits, you will find a treasure trove of case decisions that strongly support the student, and by extension, the homeowner.






5 Responses

  1. “Defendants’ counsel objected on various evidentiary grounds, including that “the business records in question were either prepared by someone else that the witness is not qualified to testify to as the custodian of records” and that they had not been properly authenticated. He also objected that there was no testimony about any element of section

    “Defendants’ counsel reiterated his objections. He objected to the admission of the check copies on grounds that they had not been properly authenticated or shown to be business records for purposes of section 1271. He objected to the admission of the loan packets on grounds that the documents were irrelevant (§ 350), contained inadmissible hearsay to which no exception applied (§§ 1200, 1271), and had not been properly authenticated (§ 1400). He also objected that Hughes lacked personal knowledge of the matters she testified to (§ 702) and was improperly providing oral testimony to prove the content of writings (§ 1523).”


    …Evidence Code section 1271.

  3. “On appeal, defendants contend that the trial court prejudicially erred by admitting hearsay documents without requiring plaintiffs to satisfy the foundational requirements of Evidence Code section 1271.2 We reverse.”

  4. Reblogged this on California freelance paralegal and commented:
    For some strange reason mortgage debt seems to be considered sacrosanct. In my opinion one major factor is the the fact that the big banks and mortgage servicers are considered to be systemically important financial institutions.

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