Credit Denial
I applied for a Private student Loan in which i was denied and the company requested that I add a cosigner in order to get an approval. I added a cosigner and the application was credit approved. The company sent a Truth-In-Lending document and a Promissory Note as well as requested verification of school enrollment and verification of employment. I signed the Promissory Note and submitted the other requested information. About a month later, the company sent me an Adverse Action letter and they claimed that I had too many Student Loans. The company has a policy that states a borrower can borrow up to $250,000.00. I have not reached that amount.
After submitting a signed Promissory note, is it fair the company deny me credit for the reason given if they allow borrowers to borrow up to a maximum amount of $250,000.00? The company in question is Campus Door Student and the are funded by Lehman Brothers Bank FSB. Are there any grounds for a Civil suit considering that they delayed processing of my application and even requested my photo ID and Social Security Card? If so, what type of lawyer should I look to retain?
Re: Credit Denial
You asked about a denied student loan.
Funny you should ask because I am working on a matter in this area right now. Banks in the student loan area are very cautious now because of a problem they created. Private lenders lobbied Congress to include private student loans in those loans that were presumptively nondischargeable in bankruptcy. In a classic case of be careful of what you wish for, now that private loans are presumptively nondischargeable it means that the standard for overcoming the presumption of nondischargeability must be much lower than it was when only government backed student loans were in that class. Guaranteed lenders biggest argument was that such "publicly financed" loans are subject to a higher standard because of the public involvement. For this and because of some other changes that also have turned out to be unfavorable in the Bankruptcy Act amendments of 2005 the lenders must be very cautious about lending.
How does this affect you? Well, you got turned down for a loan because of potential risk. You should appeal to the company and discuss the specific reasons for denial. They may change their mind.
But as to a denial simply based on their improper application of policy that probably wouldn't fly too far. While most transactions take place when an agreement is reached between the parties, a loan is often a contract only when the the commitment becomes fixed. You could have a claim based on promissory estoppel, or maybe even breach of contract.
The problem is that in order to enforce either you would actually have to pay for the suit and the potential of getting the cost of the suit back is low. I can't speak as to the odds of prevailing as I don't know enough. I would be happy to look at the matter but this isn't something that most, if any, attorney will bring on contingency.
Regards,
Roger
