Recently cases filed by student loan lenders have been dismissed because those lenders were not able to prove the ownership of the loans they were attempting to collect.
Most private student loans are originated by banks. These loans are then bundled together by financing companies and sold to investors through a process known as securitization. In some instances the original loan documents, and the assignment paperwork proving current ownership of the loan, can not be located. Courts are throwing out lawsuits filed by lenders that can not prove ownership of the loan. We have seen similar dismissals of mortgage foreclosure cases (when banks can’t prove ownership of the mortgage) in Broward County, Florida.
In cases that are not thrown out (but that proceed to trial) the lender needs a witness that can introduce the business records, and prove the borrowers’ default and the loan balance. Without this witness the court will enter judgment against the lender.
