Greetings!

I am have successfully completed 7 of the required 9 months of my loan rehabilitation program. USA Funds is handling my account while General Revenue Corp is collecting my payments each month. Two questions:

(1) I am trying to get approved to buy a house but when the lender ran my FICO we discovered that my payments are being marked as 'late' even though they are on-time each month (I set up auto pay to ensure this). Is this simply because all defaulted student loan payments are technically late until the default status is removed? And, if so, can I expect these so-called late payments (along with the default status) to be removed after I finish the rehabilitation program?

(2) General Revenue asked me to fill out a loan consolidation form. Since lenders aren't buying back loans right now, they said that it is mandatory that I fill out the form so that they can present it to the Department of Education (who I am told will purchase my loan after my 9th payment). They have told me that this is required in order to finish my rehabilitation program, and not doing so will result in my account being "reviewed for possible involuntary action through the Administrative Wage Garnishment program." My question is, if I submit this form (and thus choose to 'consolidate' my loan), will I still qualify for the benefits of loan rehabilitation? In other words, will 'they' claim that I opted for loan consolidation opposed to loan rehabilitation? I'm a bit confused??? Also, am I correct in assuming that if the DOE purchases my loan then that will be the final step of completing my rehabilitation program???

I really appreciate any insights y'all can provide!!

-Brad

Have you looked at your reports yourself? You need to have a look at what is on there. Get them directly from each CRA.

Then, you know for sure how they are reporting.

Forcing you to fill out a consolidation application under the threat of garnishment is bull shit. Right now, most FFELP lenders which USA Funds is do not have anyone to rehab lenders so if they put the consolidation app thru, you do not get the benefits of rehab. Consolidation is not rehab.

Yes, the reason they're reporting late every month is because you're always late as long as you're in default. Technically, the entire amount owed came due immediately when you defaulted. When you finish rehab, the tradeline from the guarantor will be deleted, but the tradeline from the lender stays.

Thanks for the replies!

So, what is the recommended course of action? Here is my guess but I really appreciate everyone's feedback:

(1) Get a statement from USA Funds describing EXACTLY how the rest of my loan rehabilitation program will work, especially since they are asking (nay, demanding!) that I fill out a consolidation form. I am looking for something that (i) explicitly states that my credit report will be restored (default status and late payments removed) after I complete my rehabilitation program....as well as (ii) a statement that clearly indicates that filling out the consolidation form will NOT affect my ability to achieve the aforementioned rehabilitation objectives (restored credit). I think USA Funds will be able to provide me with (i) but since General Revenue Corp is asking me for the consolidation, I think I may have to get (ii) from General Revenue. Does this sound fair / correct???

BTW, I have tried to call General Revenue to ask about the consolidation request and the number listed on the consolidation form and on their website hasn't been working all week! They certainly don't make it easy for people like me who want to make things good, do they?!? :)

(please note: I actually have two student loans, one for $15k and the other for $1k, and it is the second/smaller one that accidentally went into default as I contacted my financial aid office IMMEDIATELY after I graduated so that they could walk me through the process of making payments because I feared default....so I am good with the $15k loan but somehow the 'little' $1k loan slipped under the rug and came back to bite me in the butt - it is the one in default and just paying it off to clean my credit report doesn't appear to be an option...by the time I found out about it, it was already in default, so they told me that I had to go through the arduous rehabilitation process to clean things up - ugh!)

I apologize for my frustration and REALLY appreciate everyone's help!!!

Thanks again,
Brad

OK, I have the app in front of me...

It says; "As a result of current market conditions in the student loan industry, specifically loss of all participating lenders, your guarantor is changing its current rehabilitation program effective immediately. Your loan will still be eligible for rehabilitation but only if it is accompanied by a loan consolidation application."

It goes on to say; "Once the rehabilitation is complete your loan will be immediately forwarded on to the Department of Education for consolidation. All of the benefits of the rehabilitation program that were explained to you by our collection representatives will still be available to you once your application is complete."

Also; "Please note that if you do not complete the encloses (loan consolidation) application or have not entered into a voluntary payment agreement with our company, your account will be reviewed for possible involuntary action through the Administrative Wage Garnishment program."

So, what do I do? It sounds like I have to fill out the loan consolidation form in order to complete my loan rehabilitation program....and that since no lenders are available, the Department of Education will buy it back but only if I fill out the consolidation form. What gives?

Thanks!

Well I guess we could look at this a few ways. First, it looks like the DOE sees that there are no lenders available for the rehab program and is taking action. From what you have read from your letter it appears that all will be the same, but i am curious about the negatives on the credit report. This quote "All of the benefits of the rehabilitation program that were explained to you by our collection representatives will still be available to you once your application is complete." could mean that you would be elgible for educational loans again, not the negatives removed from the reports. Lynn seems to know alot about this subject so I will wait for her response, but I would be very wary about that part of it.

I wonder when I will get my letter like yours? I'm on my 5th payment now.

I can understand why a lender would require a consolidation app to use right after rehab....lenders just dont want the rehabs right now in their portfolios because they high risk and having the consolidation app guarantees they are in and out the door. Plus I do remember something that Cynic once said about requiring consolidation apps with the rehab app...so it well may be legit. However, they cannot threaten garnishment if you do not comply.