I am agreement here regarding the definition of a defaulted loan and how it impacts the rehabilitated loan.
I had a defaulted loan thru Sallie Mae which was rehabbed thru their guarantor and then resold to AES. The loan has 2 entries on my credit report - 1 by Sallie Mae and 1 by AES. Same loan, same start date, etc.
First, Sallie Mae never complied with the 30 day requirement:
(ii) The prior holder of the loan must, within 30 days of receiving the notification from the guaranty agency, request that any consumer reporting agency to which the default claim payment or other equivalent record was reported remove such record from the borrower's credit history.
They never updated the credit report until I brought it to their attention nearly a year later. When they did update, they only removed the word "default" from the remarks, but kept a 300 day default payment history (10 - 120 day notations 12/2009-9/2010) in the payment section, along with various notation in the remarks and status section such as debt being paid through insurance and transferred to another office. This is not sufficient. Keeping the delinquencies (IMO) is not complying with the spirit and intent of § 682.405. Anyone looking at that history and comments knows the loan defaulted.
Tired of fighting with them. Today I filed a formal complaint with the US Ombudsman Group of the US Department of Education. I will let you know what they say.
