WASHINGTON (8/8/13)--Sallie Mae this week revealed it is preparing for Federal Deposit Insurance Corp. penalties after the regulator found alleged violations of the Servicemembers Civil Relief Act (SCRA) and other laws.
Under the provisions of SCRA, servicemembers can receive an interest-rate reduction on loans taken out before active-duty service and, in some cases, receive deferrals, principal reductions, and loan forgiveness.
Civil money penalties and restitution obligations may be imposed due to the compliance violations, Sallie Mae said this week. Among the charges are violations of Section 5 of the Federal Trade Commission Act, the Equal Credit Opportunity Act and its implementing regulation, Regulation B. Sallie Mae said it could not estimate how much the regulator fines would total, or when the issues cited by the regulator would be resolved.
The FDIC warned Sallie Mae of potential action in July. That regulator and the Utah Department of Financial Institutions issued a cease and desist order against Sallie Mae in August 2008 after they found compliance weaknesses. The cease and desist order instructed Sallie Mae to assemble a compliance committee. That committee would then develop procedures for monitoring and auditing collection activities, customer service activities, and any activities conducted by telemarketing call centers.
Sallie Mae was also ordered to train third party affiliates on state and federal consumer protection laws in the 2008 cease and desist letter.