SEIU Report on Nova Student Loan Program Sparks Concern and Underscores Need for Transparency

MIAMI--(BUSINESS WIRE)--A report released today by SEIU unveiled concerns with Nova Southeastern
University’s loan practices that involve
potential conflicts of interest, including many of the same concerns
currently being investigated by the New York Attorney General at other
universities, including a Nova financial aid call center run by a
private lender and additional bureaucracy for students who wish to use
non-preferred lenders.

CONCERNS:



Nova law school dean Joseph D. Harbaugh sits on the board of directors
of Access Group, one of the school’s
preferred lenders. A 2001 report by Harbaugh discussed how he brought
in the Access Group as a consultant for law students to discuss
budgeting and debt, with the goal of keeping student debt down.


As identified in the Miami Herald, Sallie Mae runs a Nova student loan
call center. Sallie Mae also appears to run Nova’s
graduate student loan website. Although the webpage has the NSU logo
and Office of Student Financial Assistance web banner at the top of
the page, the site is run through the Sallie Mae “e-fao.com”
site and says “powered by Sallie Mae”
in the lower right corner.


Students who wish to use a lender other than one on the preferred list
must complete additional paperwork. Nova’s
Guide to Student Financial Aid cautions students that choosing a
lender not listed on Nova’s preferred list
may result in a longer processing time.


Carl Buck, the Vice President of Peterson’s,
a subsidiary of Nelnet, presented a free seminar to Nova students on “The
Secrets of Financial Aid” in Fall 2006.

Nova should take this opportunity to be more transparent in how it
structures its student loans. The Florida state Attorney General has
started an investigation of Florida state schools and is calling on
universities across the state to sign an agreement to manage loans
without conflicts of interest.

A report released today unveiled concerns with Nova Southeastern
University’s loan practices that involve
potential conflicts of interest. SEIU researchers uncovered the
worrisome report on Nova’s student loan
practices as part of the growing concern over Nova’s
commitment to the community, as more than 100 low-wage service workers
were turned away from their jobs after forming a union.

New York Attorney General Andrew Cuomo started investigations into the
relationship between colleges and lenders nation-wide, revealing that
preferred lender lists can increase costs for students.

Deal for mortgage raises questions

Herbert A. Freeman said when he bought his double-wide manufactured home in 2001, the seller asked a favor.

For $5,000, the seller — Dennis D. Williams — wanted to use Freeman’s name and credit to also buy himself a home.

Freeman, a school custodian, agreed. He signed a $420,750 mortgage in his own name for Williams’ house.

The transaction is one of dozens of questionable deals tied to the troubled neighborhood of Windy Pines South.

At the time, Williams was president of Fintech Homes, a company that sold land-home packages in the subdivision south of Hope Mills. Freeman came to Williams about buying one of the double-wides.

Williams wanted to purchase a luxury home in the Buckhead neighborhood, off Raeford Road, Freeman said. He offered Freeman the $5,000 if he would buy it for him, with an agreement that Williams would make all the payments and pay the taxes, Freeman said.

Deeds show the transaction took place October 2001. Freeman obtained the loan to buy the house at 604 Humboldt Place. Freeman’s name is also on the sales deed as the purchaser.

The closing attorney, Andre Barrett, has since been sentenced to prison for unrelated real estate fraud. Barrett did many of the other closings in Windy Pines South, where homeowners found problems with their mortgages and ended up in foreclosure.

A week after the transaction, deeds show, Freeman got his own home in Windy Pines South with a mortgage of $89,200. Barrett closed that deal, too.

Although loan applications are supposed to list a borrower’s financial obligations, Freeman’s application for his own home makes no mention of the $420,750 loan, which would have carried monthly payments of $3,770, according to paperwork. Freeman said he earned no more than $2,800 per month as head custodian at Gray’s Creek Elementary School and with other part-time jobs.

Williams declined to answer questions about the deal.

But real estate records indicate Williams probably had credit problems. Deeds show a bank had begun foreclosure proceedings against Williams and his wife on a $345,000 home in the Kingsford subdivision that they bought in August 1999. Their mortgage — with adjustable interest that started at 12.75 percent and would go up after three years — was the same type of costly loan that sunk many homeowners in Windy Pines South.

The Williamses’ loan also carried a prepayment penalty, which meant the bank could charge fees if they sold the home before the interest rate went up.

Freeman, 54, said he had good credit. The Buckhead mortgage — in Freeman’s name — appeared to have good terms: no adjustable interest, no penalties.

Freeman liked Williams. When Freeman fell behind with his own payments in Windy Pines South — the $600 mortgage kept going up, like everyone else’s in the neighborhood — Williams gave him $6,000 to catch up, Freeman said.

“I went to Dennis, and he gave me the money to get current,” Freeman said. “I’m thinking everything is OK.”

In June 2003, deeds show Freeman extended to Williams an option to buy the Buckhead home. Freeman gave Williams power of attorney to deal with Equibanc Mortgage regarding payments and balances.

In December 2005, a deed shows, Freeman sold the property to Williams for $500,000. Freeman said no money changed hands. The home, with a swimming pool, remains in the Williamses’ name.

Freeman wasn’t so lucky. He fell behind again. The bank eventually foreclosed. He lost his home when the bank auctioned it in August 2004.

He was devastated.

“To me, it was the most embarrassing thing I ever had to do,” Freeman said. “I stayed over there a while and I got to know the people and stuff, and then when my foreclosure came, I had to move out.”

More than two years later, he’s still paying off bankruptcy debts. He rents an apartment near Bonnie Doone, off Bragg Boulevard.

“It was a waste of my time, and a dream of a home went down the tubes,” Freeman said.
Staff writer Matt Leclercq can be reached at leclercq@fayobserver.com or 486-3551.