Embracing the details and allegations hidden this argument, plaintiff University Mortgage conducts a business amongst the deals and you can keeping track of out of FFELP integration money. Offender Sallie Mae, a serious first student loan bank, and additionally procedure and you may attributes payday loans online Sandersville combination applications, and you may itself produces FFELP integration funds.
and you can sure of their affiliates (the fresh new “Agreement”). Certainly one of almost every other terms, U . s . Group agreed to “Guarantee Integration Fund which have been processed in accordance with the terms of the fresh Integration Mortgage System and also for hence Buyers complies in most thing respects on Policies while the Act.” Agreement at the ¶ 1.twelve. Usa Class and provided to “render management services to your continued maintenance of each and every Integration Mortgage Secured as required by Consolidation Financing System and [the newest HEA].” Id. Us Category specifically official one their consolidation loan servicing “will comply in all aspects towards Act.” Id. within ¶ cuatro.twenty-six. Because of these types of and other conditions of one’s Arrangement, brand new obligations of the functions incorporated conformity towards the HEA.
During the , two months adopting the Arrangement was conducted, SLM Corporation gotten particular regions of the business out of Us Group, also its financing servicing procedures
These types of mortgage upkeep procedures were up coming thought by SLM Organization’s subsidiary Sallie Mae Maintenance, L.P., and Sallie Mae and College or university Loan hence turned contractually obliged so you can interact in a lender-processor matchmaking. While the Sallie Mae associates continued giving top and combination money, University Mortgage and you will Sallie Mae continued so you’re able to in person participate just like the integration loan companies.
Pursuant on Agreement, United states of america Classification arranged, inter alia, to behave due to the fact School Loan’s servicer during the handling a portion of the borrowed funds software created by University Loan’s prospective integration consumers
College Financing contends you to definitely, when interest levels dropped inside the (and also as interest in consolidation financing increased), Sallie Mae started to breach its debt beneath the Arrangement. Particularly, College Mortgage retains you to, once SLM Corporation’s acquisition of United states Classification, Sallie Mae Servicing don’t safely techniques over 500 mortgage software published to they by University Financing for operating. College Mortgage alleges that, within the a program orchestrated of the SLM Agency, Sallie Mae Repair diverted a number of the University Mortgage integration programs so you’re able to SLM-associated lenders, generally the Education loan Sale Connection. College Financing argues that diversion of those loan requests try poor, and this was will finished without customers knowledge and also in spite of specific gang of College or university Mortgage by prospective consumers as their consolidation financial. University Loan and additionally claims one to Sallie Mae Upkeep both utilized potential debtor guidance out-of College or university Loan’s private mortgage combination versions to get hold of prospective University Mortgage borrowers and you may solicit these to go into combination fund which have Sallie Mae as opposed to having College or university Financing. Whenever met with School Financing in the late 2001 on the for example improprieties, Sallie Mae terminated the fresh Agreement.
School Loan argues one Sallie Mae also interfered with University Loan’s business because of the neglecting to conform to the latest Ten-day Code governing the new management of LVCs. University Loan maintains one Sallie Mae constantly would not done from inside the a prompt fashion (or after all) LVCs with the over 10,100 students’ financing stored from the Sallie Mae-associates which School Mortgage sought so you can consolidate. Considering University Loan, Sallie Mae’s trend out-of low-compliance on Ten day Code significantly improved at the beginning of 2002, shortly after Sallie Mae ended the new Contract.
Sallie Mae defends these types of tips by saying that of denied College or university Mortgage consolidation loan applications violated the fresh Solitary Holder Rule, and thus couldn’t end up being consolidated. Notably, Sallie Mae interprets brand new Single Holder Rule alot more expansively than simply really does College Loan. For the Sallie Mae’s evaluate, the fresh Single Holder Rule is applicable not just to men and women borrowers whoever finance take place from the exact same financial, and in addition (1) so you can borrowers whoever money are held from the various Sallie Mae affiliates, regardless of if perhaps not of the exact same user, and (2) to borrowers whose finance were transferred to a beneficial securitization believe, where certain recurring monetary attention is actually retained because of the good Sallie Mae user. This means that, even if College or university Mortgage needed the consolidation candidates so you’re able to approve, sometimes multiple times, one to their loans weren’t stored by the exact same lender or they had started refused a consolidation financing from the relevant “single owner,” Sallie Mae nonetheless refused, pursuant so you’re able to its broad look at the fresh Solitary Holder Code, a substantial quantity of University Loan’s consolidation applications.