Broward student debt collector delayed services to charge borrowers more fees, feds say
A Plantation debt collection company muddied borrower enrollment into a “loan rehabilitation” program so it could pile its own collection fees to student loan debt already crushing the borrower, according to documents in the case.
To keep borrowers from enrolling before the fee-triggering deadline, one Performant Recovery manager told an agent, “I do not want any of you to offer them our fax number ... We want them to mail all documents. Remember, the whole objective is to DELAY, DELAY, DELAY.”
That’s in the consent order Performant Recovery signed with the Consumer Financial Protection Bureau.
Officially, Performant Recovery neither admits nor denies the accusations in the consent order from the bureau about Performant’s actions from 2015 through 2020. But, also officially, Performant will settle the allegations by paying a $700,000 civil money penalty and being banned from collecting or servicing student loan debts in the future.
“When affected consumers called [Performant] within 65 days of default seeking a resolution of their defaults, [Performant] delayed their entry into rehabilitation agreements until after the 65th day so that collection costs would be added,” the consent order reads.
During this time, state of Florida documents say, Performant was run by Livermore, California-based officers CEO and Secretary Lisa Im; President Harold Leach; Chief Operating Officer Jeffrey Haughton; and Chief Accounting Officer and Treasurer Ian Johnston.
The current officers — Treasurer Johnston, CEO Simeon Kohl and Chief Financial Officer Ramachandani Rohit — are based out of Performant’s Plantation offices at 900 S. Pine Island Rd.
The student loan debt servicing ban closes the door to a room Performant already left. In Tuesday’s announcement of the parent company name change from “Performant Financial Corporation” to “Performant Healthcare,” the company says it exclusively “supports healthcare payers in identifying, preventing, and recovering waste and improper payments by leveraging advanced technology, analytics and proprietary data assets.”
Default and delay
Borrowers who defaulted on commercially held student loans through the Federal Family Education Loan Program (FFELP) have one shot to “rehabilitate” the loan through a “rehabilitation agreement.”
After making a series of modified payments, the borrower can get the loan out of default status. This keeps the borrower eligible for federal student aid; deferment; payments based on income; loan forgiveness; and income tax refunds wouldn’t be used to pay the loan, as they would be with the loan in default.
And the most borrower important benefit, as far as a collection company is concerned — the collection costs that usually go with a loan rehabilitation aren’t charged if the borrower enters a loan rehabilitation agreement within 65 days of default.
“So, to earn fees on accounts where borrowers called [Performant] within 65 days of default (pre-65 borrowers),” the consent order said, “(the company) used its control over the rehabilitation process to delay these borrowers’ entry into loan-rehabilitation agreements until after the 65th day, so that collection costs would be imposed, and [Performant] would earn fees.”
To do this, the order says, Performant “routed pre-65 borrowers’ calls to specialized agents who were instructed to forestall any rehabilitation agreement until after the 65th day.”
The order quoted a Performant managers internal email: “We have a special process on dealing with [defaulted borrower] accounts that have not had collection costs added to their accounts yet ...The objective is to delay getting these accounts into billing prior to day 65 ... Again, the objective is to delay as much as possible without getting Performant in trouble. If we put the borrower into billing prior to day 65, Performant will not get paid on the rehab.”
Performant, the order said, told these borrowers they couldn’t fill out loan rehabilitation forms electronically over the phone. But, the borrrower must get mailed blank forms “which sometimes never arrived,” fill them out and send them back via snail mail.
If borrowers didn’t get the forms in a week, agents told them they’d have to try to mail the forms again and wait another week before calling back. Borrowers also were told after mailing back their forms, wait a week before calling to check on receipt of the forms when they’d get instructions on what to do next.
“But in a number of instances, pre-65 borrowers who called Respondent after mailing their completed forms could not get through to a specialized agent,” the consent order said. “Phones were sometimes unanswered, voicemail was sometimes full or inoperative, and agents didn’t always respond to voicemails.”
Other borrowers, those already beyond the 65th day, could use email or fax.
“As a manager explained to the specialized agents, ‘I do not want any of you to offer them our fax number...We want them to mail all documents,’” the consent order said. “’Remember, the whole objective is to DELAY, DELAY, DELAY.”
So, the consent order said, the specialized agents wouldn’t tell pre-65 borrowers to include necessary documents until after the borrowers had mailed forms. They took a passive approach to mistakes or missing documentation, waiting for the borrower to call and ask about any holdups.
Also, Performant’s agents wouldn’t offer pre-65 borrowers the lowest possible payment amounts until the 65 days had passed. If borrowers’ had a problem with a payment option, called Option 1, based on income, they could pay an amount that takes into account that takes into account other monthly bills, the usually-cheaper Option 2.
But, the consent order said, Performant “sometimes offered pre-65 borrowers only the Option 1 amount, waiting until after the 65th day to offer a lower Option 2 amount.”
Should a pre-65 borrower negotiate this gantlet, Performant, the consent order said, “would sometimes still hold up the loan with the auditor if it was close to the 65th day.
“For example, a manager instructed an auditor to sit on account at day 58: “[T]his is a Pre 65 day account please don’t put the borrower into payment until day 65 has passed.”
This story was originally published December 12, 2024 at 7:57 AM.
