Assigned to Government.... After Rehab

[Anonymous]

So I did my epic default on everything a while back ago, and since then I've completed rehab on a number of loans with different lenders.  Many of these loans still show "assigned to government,"  "placed for collections," "Defaulted Loan -- claim filed,"  or similar messages.   A few lenders, on the other hand, completely wiped everything including late history.  They seem to be really all over the place in terms of what action they have taken after I rehabbed.  

I've read some of the posts on this forum, and I think some of them are missinformed that rehab only applies to the guarantor.  Perhaps I'm wrong, but I'd like to hear your reasons why after hearing mine.  I have read the statutory rehab agreement (34 CFR 682.405) and it plainly says that the guarantor must notify the "prior holder" of the loan, and within 30 days must remove the "default claim or equivalent record."  Thus, both the gurantor and prior holder have obligations to remove default claims or equivalent records.

Aren't these agencies (Sallie Mae, AES, etc) the prior holder before they assigned it to the government?  Does "prior holder" mean someone other than I think it does?  

My argument is that this "placed in collections" and "assigned to government" is just equivalent verbage (i.e. an equivalent record) to indicate the loan is in default.  An yah, 34 CFR 682.405 is suppose to apply to default claims or "equivalent records;"  rehab was designed to have "credit clearing" effects.  

So am I missing something here?  When I call up the ombudsman of these groups to complain I want to know where I stand, so let me know your thoughts.  Should or shouldn't these things be coming off a credit report after you rehab?

[twall06]

Sometimes it takes a while for them to get picked up by a lender . It took a few months for a new lender to pick mine up. Once they did all the negative dropped off my reports and showed them as paid. Took three months after I made my ninth payment.

[Anonymous]

Mine's been picked up for about 4-5 months now.  Could you be more specific as to the types of negatives that came off?  Who took them off?  I still see words like "defaulted loan,"  "$x,xxx  past due,"  "sent to collections,"  "assigned to government," etc.

I called the US Dept. of Ed. today.   Talked to the default resolution group first, and they told me they could not remove any of that stuff because it was put on by direct loans (another part of the Dept. of Ed).  So I talked to Direct Loans, waited 30 mins to get through, lady said nothing comes off your credit report.  I asked if she knew what loan rehab was, she said "no, cause I never defaulted on my loans...."  I told her its a program that is suppose to help students clear their default history on educational debt, and I completed a rehab with US Departmetn of Ed.  She said she didn't know about that.  I asked if I could speak to someone else who knows about the program, and was told it wasn't their responsibility to know what it is .... and got hung up on.

So that's where I'm at with Dept of Ed.....DRG says I need to speak with direct loans since they put it on the credit report, and direct loans says rehab, what is that??

[InvincibleSummer3]

Have you tried the Student Aid Ombudsman? Might be worth a shot. At the very least, they do seem know know how the rehab program is supposed to work.

http://studentaid.ed.gov/repay-loans/disputes/prepare

[twall06]

It shows my original loans as paid and all the negatives are gone fom them .

[Anonymous]

Well I called today, and spoke with ED Financial and Sallie Mae -- It appears they never got notice of the rehab I completed.  Sallie Mae asked me to call back in 30 days while they check into it, Ed Financial in a week.  

ED Financial orally seemed to agree that the "assigned to gov't" and other stuff should come off; but I also had a letter from their guarantor saying that the rehab would remove "derogatory credit information" so they probably had no choice, given how their letter is worded.  

US Dept of Ed never sent me any letter describing the effects of rehab, but under law they are suppose to send one, describing the "credit clearing" effects.  US dept. of Ed appears to have cleared the record of default on 2 credit bureaus (or alternatively it was never reported), but the direct loans people won't even speak to me about "rehab" when I say my loans are still showing as past due at the third credit bureau.  Waiting to see if this US Dept of Ed ombudsman gets back to me.

[Wanka77]

I had defaulted on 5 of my students loan back in 2008, beig EdFinancial the OC and then it was re-assigned to the Gov (DOE).  I completed a 9-12 month rehab program w/ the DOE and they removed all of negative rprtng from my credt but the OC "EdFinancial" still has their derog info in all of my credit rprts.  I hve submitted a Disp w/ TU and didn't help.  It still reflects on my report.  After researching various forums groups, I was adviced to either wait sor SOL (6/2015) or start sending GW letters.  I didn't get anyother alternatives besides those.  You stated that EdFincl agreed in removing those TL ?  Did you call them and asked to speak with someone in particular?  Please keep me informed.  Thank You!!!

[Anonymous]

I only got oral confirm; they indicated agreement that "assigned to gov't" will come off.  She said they would change it to "sold or transferred."  I've learned not to trust over-the-phone promises, but at least its something to look forward to.

Not sure what will happen to the late payments leading to default.  My guarantor was ISAC (Illinois student assistance comission), and they sent me a letter saying "derogatory credit information" would be removed upon rehab.  So, first i'm going to wait and see what EdFinancial does since they were never informed of the rehab.  Then, I may try to press anything that remains and seems negative using the rehab letter ISAC sent out.

p.s. anyone get rehab letters from Sallie Mae or Us Dept. of Ed?   I don't think either one sent a letter, but they are suppose to send one out describing the "credit clearing" effects.   May be a useful tool if anyone has a copy of the language used in their letters -- i.e. to hold them to their representations.

[InvincibleSummer3]

I didn't get them from the DOE when I rehabbed. But their website says "Benefits of loan rehabilitation include the removal of

• the default status on your defaulted loan,
• the default status reported to the national credit bureaus,
• wage garnishment, and 
• any withholding of your income tax refund made by the Internal Revenue Service (IRS)."

Note that it doesn't say anything about the lates leading up to the rehab coming off. Depending on the age of your loan, these may be old enough to fall off on their own. But in my case, where I defaulted in 2009, they are still there. Oddly, my lates came off TU and EX, but for some reason they still show on EQ. I disputed the lates with EQ (based on some advice I read here) but they came back verified. YMMV, clearly.