Consent Order  Navient Solutions, Inc. f/k/a Sallie Mae, Inc. and Navient Credit Finance Corporation f/k/a SLM Education Credit Finance Corporation

Date:	10/24/2014
Organization:	Division of Banks
Docket Number:	2014-014
Location:	Reston, VA

Navient Credit Finance Corp., fka Sallie Mae, Inc., Reston, VA - Consent Order

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
SMALL LOAN LICENSING
AND LOAN SERVICER
REGISTRATION
Docket No. 2014-014

CONSENT ORDER

In the Matter of

NAVIENT SOLUTIONS, INC. f/k/a SALLIE MAE, INC.
Small Loan License No. SL0890
Third Party Loan Servicer Registration No. LS212430

and

NAVIENT CREDIT FINANCE CORPORATION f/k/a
SLM EDUCATION CREDIT FINANCE CORPORATION
Small Loan License No. SL0897

Reston, Virginia

WHEREAS, NAVIENT SOLUTIONS, INC. (“Navient Solutions”), formerly known as SALLIE MAE, INC. and NAVIENT CREDIT FINANCE CORPORATION (“Navient Credit Finance”), formerly known as SLM EDUCATION CREDIT FINANCE CORPORATION, Reston, Virginia (collectively, the “Corporations”) have been advised of their rights to Notice and Hearing pursuant to General Laws chapter 30A, and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF A CONSENT ORDER (“Consent Agreement”) with representatives of the Division of Banks (“Division”) dated October 24, 2014, whereby, solely for the purpose of settling this matter, and without admitting any allegations or implications of fact or the existence of any violation of state or federal laws and regulations governing the conduct and operation of a small loan company and/or a third party loan servicer, the Corporations agree to the issuance of this CONSENT ORDER (“Consent Order”) by the Commissioner of Banks (“Commissioner”);

WHEREAS, Navient Solutions is a licensed small loan company under General Laws chapter 140, section 96 and 209 CMR 20.00 et seq. and a registered third party loan servicer under General Laws chapter 93, sections 24 to 28 and 209 CMR 18.00 et seq.; and Navient Credit Finance is a licensed small loan company under General Laws chapter 140 and 209 CMR 20.00 et seq.;

WHEREAS, Navient Solutions has submitted a request to surrender its Massachusetts small loan license but will continue to maintain its registration as a third party loan servicer at this time;

WHEREAS, Navient Credit Finance owns certain loans falling within the scope of General Laws chapter 140, section 96 et seq. and 209 CMR 26.00 et seq. (“Small Loans”) and Navient Solutions currently services those Small Loans and certain other Small Loans under General Laws chapter 93, sections 24 to 28 and 209 CMR 18.00 et seq., but in no case was either Corporation the original lender;

WHEREAS, an examination of the Corporations was conducted pursuant to General Laws chapter 140, sections 96 to 114A, as of April 11, 2011 to assess the Corporations’ level of compliance with applicable Massachusetts and federal laws and the Division’s regulations governing the conduct of those engaged in the business of a small loan company and third party loan servicer in Massachusetts; and

WHEREAS, the Report of Examination (the “Report”) was issued on July 1, 2013 and alleged continued non-compliance with applicable state statutes, rules, and regulations governing the conduct of those engaged in the business of a small loan company in Massachusetts as originally cited in the Reports of Examination issued on February 17, 2009.

ORDER

NOW COME the parties in the above-captioned matter, the Division and the Corporations, and stipulate and agree as follows:

1. Within thirty (30) days of the effective date of this Consent Order, Navient Credit Finance must establish, implement, and maintain procedures for Small Loans it owns and Navient Solutions must establish, implement, and maintain procedures for Small Loans it services for any related party (together, the “Loans”) that will ensure that, on a going forward basis, while they own or service such Loans, respectively, no borrower who was or is a resident of Massachusetts at the time of origination and who obtained or obtains a Loan of $6,000 or less with an interest rate in excess of 12% is assessed late charges over the amount set forth in the Division’s regulation 209 CMR 26.01(4)(c) (the “specified late charge amount”). 
   1. For the purposes of this Consent Order, the term “related party” shall mean: 1. any corporation for which Navient Corporation, the parent company for Navient Solutions, owns, controls, or has the power to vote more than 50% of the common stock of the corporation, directly or indirectly, or acting through one or more persons; or 2. any limited liability company of which Navient Corporation has more than 50% of the ownership interest.
   2. The Corporations must conduct a portfolio review of held and serviced Loans from the date the Corporations were initially licensed in the Commonwealth to the date of this Consent Order to determine all instances in which a borrower who the Corporations reasonably believe resided in Massachusetts at the time of origination and who obtained a Loan of $6,000 or less with an interest rate in excess of 12% was assessed a late charge over the specified late charge amount.
   3. In each such case referenced above, the Corporations must refund to the borrower the amount assessed over the specified late charge amount.  Such refunds shall be accomplished by adjustment to the account of any borrower whose Loan has not been repaid or by mailing a check to the last known address shown on the records of the Corporations for any borrower whose Loan has been repaid in full, as applicable.
   4. The Corporations must make a good faith effort to ensure that the affected borrowers receive the refund checks that were issued, using reasonable means to identify the current address of each borrower.  In the event that, after a good faith effort, the Corporations are unable to locate and directly reimburse affected borrowers, the Corporations must pay any remaining funds to the Treasurer’s Unclaimed Property Division in accordance with chapter 200A of the General Laws.
   5. The Corporations shall submit a report of all refunds issued pursuant to this Section of this Consent Order.  The report shall include each borrower’s name, account number, the dollar amount of the total refund for that borrower, and evidence that the refunds were made or that the funds were paid to the Treasurer as required under Section 1(c).  The report shall be submitted within one hundred fifty (150) days from the effective date of this Consent Order.
   6. If the Corporations have provided or are obligated to provide refunds to a borrower for late charges in an amount equal to or greater than the amount set forth above pursuant to the Order for Restitution issued by the Federal Deposit Insurance Corporation (“FDIC”) on May 13^th, 2014 In the Matter of Navient Solutions, Inc. f/k/a Sallie Mae, Inc. (the “FDIC Restitution Order”), or pursuant to any order of any other federal agency that becomes effective within one hundred fifty (150) days from the effective date of this Consent Order, this Consent Order shall not be construed to require the Corporations to make duplicate credits or payments to borrowers.  However, to the extent that the refunds made or to be made pursuant to the FDIC Restitution Order or any such other order are less than the amount required pursuant to this Section of the Consent Order, the Corporations must refund each borrower the difference.  Documentation of any adjustments made pursuant to this Section of the Consent Order shall be submitted with the report referenced in Section 1(d).

2. Within thirty (30) days of the effective date of this Consent Order, Navient Credit Finance must establish, implement, and maintain procedures for Small Loans it owns and Navient Solutions must establish, implement, and maintain procedures for Small Loans it services for any related party that will ensure that, on a going forward basis, while they own or service such Loans, respectively, no borrower who was or is a resident of Massachusetts at the time of origination and who obtained or obtains a Loan in an original principal amount of $6,000 or less with an interest rate in excess of 12% is assessed a returned check fee over the amount set forth in General Laws Chapter 140, Section 100 (the “specified returned check fee amount”).
   1. The Corporations must conduct a portfolio review of held and serviced Loans from the date the Corporations were initially licensed to the date of this Consent Order to determine all instances from the date of initial licensing in which a borrower who the Corporations reasonably believe resided in Massachusetts at the time of origination and who obtained a Loan of $6,000 or less with an interest rate in excess of 12% was assessed a returned check fee over the specified returned check amount.
   2. In each case referenced above, the Corporations shall refund to the borrower the amount assessed over the specified returned check fee amount.  Such refunds shall be accomplished by adjustment to the account of any borrower whose Loan has not been repaid or by mailing a check to the last known address shown on the records of the Corporations for any borrower whose Loan has been repaid in full, as applicable.
   3. The Corporations must make a good faith effort to ensure that the affected borrowers receive the refund checks that were issued, using reasonable means to identify the current address of each borrower.  In the event that, after a good faith effort, the Corporations are unable to locate and directly reimburse affected borrowers, the Corporations must pay any remaining funds to the Treasurer’s Unclaimed Property Division in accordance with chapter 200A of the General Laws.
   4. The Corporations must submit a report of all refunds issued pursuant to this Section of this Consent Order.  The report shall include each borrower’s name, account number, the dollar amount of the total refund for that borrower, and evidence that the refunds were made or that the funds were paid to the Treasurer as required under Section 2(c).  The report shall be submitted within one hundred fifty (150) days from the effective date of this Consent Order.
   5. If the Corporations have provided or are obligated to provide refunds to a borrower for returned check charges in an amount equal to or greater than the amount set forth above pursuant to any order of a federal agency that becomes effective within one hundred fifty (150) days from the effective date of this Consent Order, this Consent Order shall not be construed to require the Corporations to make duplicate credits or payments to borrowers.  However, to the extent that the refunds made or to be made pursuant to any such order are less than the amount required pursuant to this Section of the Consent Order, the Corporations must refund each borrower the difference.  Documentation of any adjustments made pursuant to this Section of the Consent Order shall be submitted with the report referenced in Section 2(d).

3. While this Consent Order is in effect, on the thirtieth (30^th) day after the end of each calendar quarter following the date of this Consent Order, the Corporations must furnish written progress reports to the Division, which shall address and include the following:
   1. A description of the form, content, and manner of any actions taken to address each Section of this Consent Order and the results thereof; and
   2. Written findings prepared by the Corporations detailing a review of management’s and staff members’ adherence to the policies, programs, and procedures adopted pursuant to this Consent Order and to applicable statutes, regulations, and rules, as well as a description of any operational changes implemented during such quarter which are intended to improve the Corporation’s compliance condition in Massachusetts and the results thereof.

4. The reporting requirement to the Division referenced in Section 3 of this Consent Order shall remain in effect and shall not be amended or rescinded without the prior written modification, termination, or suspension of the applicable provision of this Consent Order from the Commissioner.
5. Nothing in this Consent Order shall be construed as permitting the Corporations to violate any law, rule, regulation, or regulatory bulletin to which the Corporations are subject.
6. In consideration of this Consent Order, the Division agrees not to pursue formal measures, relative to this matter, to suspend or revoke Navient Solutions’ third party loan servicer registration, to suspend or revoke Navient Credit Finance’s small loan company license, or to take any other formal or other action against the Corporations with respect to the matters covered by this Consent Order while this Consent Order is in effect, but subject to Section 7.
7. Failure to comply in any material respect with the terms of this Consent Order shall constitute grounds for license or registration suspension and/or revocation, or other formal regulatory action pursuant to applicable provisions of the General Laws of the Commonwealth of Massachusetts.
8. This Consent Order shall become effective immediately upon the date of its issuance.
9. The provisions of this Consent Order shall remain effective and enforceable except to the extent that, and until such time as, the Commissioner or a court of competent jurisdiction modifies, terminates, suspends, declares invalid or sets aside any provision of this Consent Order, or declares unconstitutional, invalid or unenforceable, as applied to the Corporations, any law or regulation on which this Consent Order is based.
10. The provisions of this Consent Order shall be binding upon the Corporations, their officers and directors, their successors and assigns, and those related parties in active participation with it, directly or indirectly, acting individually or through any corporate or other entity.
11. The provisions of this Consent Order shall not limit, estop, or otherwise prevent the Division, or any other state agency or department, from taking any other action affecting the Corporations or any of its officers and directors, or their successors or assigns except to the extent any such other action is inconsistent with the terms of this Consent Order.
12. In accordance with the terms of the Consent Agreement entered by the Corporations and the Commissioner, the Corporations have waived all rights of appeal that it may have relative to this Consent Order or any of its provisions.
13. This Consent Order and the Consent Agreement are the complete documents representing the resolution of this matter.  There are no other agreements between the Division and Navient Solutions or Navient Credit Finance.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 24th day of October, 2014

David J. Cotney
Commissioner of Banks
Commonwealth of Massachusetts

THIS CONSENT ORDER WAS TERMINATED ON JULY 1, 2015.