CFPB and Multiple States Settle with Owner of ITT Private Loans

The settlement stems from alleged unfair acts and practices related to student loan servicing.

9/15/2020 8:00 AM

NewsCFPB
CFPB and Multiple States Settle with Owner of ITT Private Loans

The Consumer Financial Protection Bureau filed a proposed stipulated judgment against PEAKS Trust 2009-1, along with Deutsche Bank National Trust Company, Deutsche Bank Trust Company Delaware, and Deutsche Bank Trust Company Americas, in their capacity as trustees to PEAKS Trust 2009-1 (collectively, PEAKS), for allegedly assisting ITT Educational Services Inc. (ITT) in engaging in unfair acts and practices in violation of the Consumer Financial Protection Act of 2010, according to a news release.

PEAKS owned and managed private loans for students at ITT Technical Institute and “allegedly knew or was reckless in not knowing that many student borrowers did not understand the terms and conditions of those loans, could not afford them, or in some cases did not even know they had them,” the CFPB reports.

The CFPB’s complaint was filed in the U.S. District Court for the Southern District of Indiana.

If entered by the court, the proposed judgment will require PEAKS to forgive all its outstanding loans—approximately $330 million in debt—for about 35,000 borrowers who currently have outstanding principal balances. Forty-seven states plus the District of Columbia have also settled with PEAKS.

ITT operated ITT Technical Institute until it filed for bankruptcy and ceased operations in 2016. The bureau filed suit against ITT in February 2014, alleging that ITT engaged in unlawful acts and practices to push students into private student loans in a scheme to improve the appearance of ITT’s financial statements and its standing among investors, according to the news release.

If entered by the court, the proposed stipulated judgment would require PEAKS to stop collecting on all outstanding PEAKS loans, discharge all outstanding PEAKS loans, and ask all consumer reporting agencies to which PEAKS furnished information to delete information relating to PEAKS loans. The order would also require PEAKS to provide notice to all consumers with outstanding PEAKS loans that their debt has been discharged and is no longer owed and that PEAKS is seeking to have the relevant consumer reporting information deleted. The total amount of loan forgiveness is currently estimated to be $330 million, for about 35,000 consumers with outstanding balances owed on their PEAKS loans.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

CFPB and Multiple States Settle with Owner of ITT Private Loans

The Consumer Financial Protection Bureau filed a proposed stipulated judgment against PEAKS Trust 2009-1, along with Deutsche Bank National Trust Company, Deutsche Bank Trust Company Delaware, and Deutsche Bank Trust Company Americas, in their capacity as trustees to PEAKS Trust 2009-1 (collectively, PEAKS), for allegedly assisting ITT Educational Services Inc. (ITT) in engaging in unfair acts and practices in violation of the Consumer Financial Protection Act of 2010, according to a news release.

PEAKS owned and managed private loans for students at ITT Technical Institute and “allegedly knew or was reckless in not knowing that many student borrowers did not understand the terms and conditions of those loans, could not afford them, or in some cases did not even know they had them,” the CFPB reports.

The CFPB’s complaint was filed in the U.S. District Court for the Southern District of Indiana.

If entered by the court, the proposed judgment will require PEAKS to forgive all its outstanding loans—approximately $330 million in debt—for about 35,000 borrowers who currently have outstanding principal balances. Forty-seven states plus the District of Columbia have also settled with PEAKS.

ITT operated ITT Technical Institute until it filed for bankruptcy and ceased operations in 2016. The bureau filed suit against ITT in February 2014, alleging that ITT engaged in unlawful acts and practices to push students into private student loans in a scheme to improve the appearance of ITT’s financial statements and its standing among investors, according to the news release.

If entered by the court, the proposed stipulated judgment would require PEAKS to stop collecting on all outstanding PEAKS loans, discharge all outstanding PEAKS loans, and ask all consumer reporting agencies to which PEAKS furnished information to delete information relating to PEAKS loans. The order would also require PEAKS to provide notice to all consumers with outstanding PEAKS loans that their debt has been discharged and is no longer owed and that PEAKS is seeking to have the relevant consumer reporting information deleted. The total amount of loan forgiveness is currently estimated to be $330 million, for about 35,000 consumers with outstanding balances owed on their PEAKS loans.


Follow ACA International on Twitter @ACAIntl and @acacollector, Facebook and request to join our LinkedIn group for news and event updates. ACA International members are welcome to submit news items for possible publication to comm@acainternational.org. Visit our publications page for news submission guidelines and subscriptions to ACA Daily, Collector magazine and Pulse.

Advertising is available for companies wishing to promote their products or services. Be sure to visit the ACA Events Calendar on the Education and Training page to view our listing of upcoming CORE Curriculum and Hot Topic seminars featuring critical educational opportunities for your company.


Subscribe to ACA Daily NEWSROOM

Loading...

Loading...

Scroll to Top