Consumer complaint received 2024-10-11
Product: Debt collection — Federal student loan debt
Issue: Attempts to collect debt not owed — Debt is not yours
Company: Nelnet, Inc. (CA)

Hi, I am disputing a student loan account serviced by Nelnet ( Account No. ending in XXXX ). After requesting verification of the debt, Nelnet responded by sending a one-page document, which they referred to as a promissory note. This document is incomplete and lacks the essential loan terms, making it insufficient to verify the debt. On XX/XX/XXXX, I formally disputed the debt again, demanding lawful proof of the debt, including the original loan agreement and the terms under which it was issued. To date, Nelnet has not responded to this request, in violation of 15 U.S.C. 1692g ( b ) under the Fair Debt Collection Practices Act ( FDCPA ). This section requires a debt collector to cease collection efforts until the debt is verified. Furthermore, under Californias Rosenthal Fair Debt Collection Practices Act ( RFDCPA ) ( California Civil Code 1788.17 ), a debt collector is similarly required to provide validation of the debt or cease collection activities, and failure to do so opens them to statutory penalties.

Given that Nelnet has not provided lawful proof of the debt or responded to my repeated requests for verification, I have
already filed a complaint with the California Department of Financial Protection and Innovation ( DFPI ) under the California Student Loan Servicing Act ( CSLS Act ) ( California Financial Code 28100-28186 ). This law imposes strict record-keeping and disclosure requirements on loan servicers, including the obligation to maintain accurate records of student loans and provide borrowers with access to loan terms and agreements. Nelnet 's failure to produce the complete loan agreement violates the CSLS Acts record-keeping requirements and transparency obligations. 

Additionally, the recent discovery of a CUSIP number ( XXXX ) linked to my student loan account in the XXXX Government Securities Fund indicates that this loan has been securitized. Under UCC 9-210, as the debtor, I am entitled to request a full accounting of the secured transaction, including any records or statements that show the current status of the purported debt, a complete chain of title, and evidence of any perfection of the security interest. Failure to comply with this request for accounting violates UCC Article 9, which governs secured transactions. 

The existence of the CUSIP number raises additional legal concerns. In the process of securitization, it is common for original promissory notes to be sold, transferred, or even destroyed. UCC 3-309 addresses the enforcement of lost, destroyed, or stolen instruments, requiring the party seeking to enforce the instrument to prove their entitlement to enforce it and provide sufficient evidence of the terms and ownership of the note. Without this documentation, Nelnet has no lawful right to collect on this debt. 

Further, the securitization of this loan alters the nature of the debt, as the underlying note may have been transferred to a trust or other investment vehicle. This is significant because UCC 9-203 ( b ) mandates that a secured party must have rights in the collateral ( in this case, the loan ) to enforce the security interest, and those rights must be perfected. Under UCC 9-308, perfection of a security interest occurs when all the steps required for perfection under the UCC are taken, such as filing a UCC-1 financing statement or continuation statement. Nelnet and XXXX XXXX XXXXXXXX, the original lender, must provide documentation of perfection and a valid servicing rights agreement to establish their right to collect the debt. If no such proof exists, the collection of this debt violates UCC Article 9.

Additionally, this loan transaction may be governed under TILA ( Truth in Lending Act, 15 U.S.C. 1601-1667 ), which requires accurate disclosure of the terms and conditions of the loan. Nelnet 's failure to provide the original loan documentation, including the terms and conditions of the loan, may violate TILAs requirements. Without a clear chain of title or proof of perfection, Nelnet and its affiliates may not have the legal right to service or collect on this debt.

The case law supports my position that Nelnet must provide sufficient proof of the debt. In XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXXXXXX ), the court ruled that without the original note, a party could not enforce the loan. This ruling emphasized the importance of maintaining original documentation when securitization occurs. Similarly, XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX XXXX held that the note and the mortgage must remain together. Without the original note, there can be no lawful enforcement of the mortgage or security interest. 

Under UCC 9-210, I am requesting that Nelnet, XXXX XXXX XXXX XXXX Sloan Services , and their affiliates provide the following : Full accounting and records of the debt, including a ledger and statement of the account.

Proof of the original promissory note and a clear chain of title showing any transfers or assignments of the note.

Proof of perfection of the security interest through UCC-1 filings and continuation statements, and evidence of the legal right to service and collect the debt. 
If Nelnet, XXXX XXXX XXXXXXXXXXXX Sloan Servicing and or its affiliates fails to provide this documentation within five business days, I will be left with no choice but to pursue legal action against them collectively, including a federal lawsuit seeking damages for predatory lending practices, violations of federal and state debt collection laws, and misreporting to credit agencies. The continued reporting of this unverifiable debt has damaged my credit profile, preventing me from securing expansion funding for my business and purchasing a home for my family. 

This complaint is intended to give the Consumer Financial Protection Bureau ( CFPB ) the necessary information to compel Nelnet to either provide the legally required documentation or cease all collection activities and correct the inaccurate reporting on my credit.