Sunday, August 22, 2010

Student Loan Company Gives Preferential Treatment to Former Albany Prosecutor

Believe it or not, companies that service student loans have a heart and make exceptions.  No, not for you--but for those who probably don't need the help.  While surfing the Internet, I happened upon this story: Higher Education Services Corp. (HESC) suspended six workers after discovering favoritism afforded to a former Albany New York Prosecutor turned "of counsel attorney" to O'Connell & Aronowitz--Michael P. McDermott.  What sort of favoritism you ask?  Well, the type that you beg for when you're behind on your loan payments and they are about to kick it to collections and ruin your life.  Apparently, and as BIDER readers know, Mr. McDermott was going to have to pay big for moving from public interest law to private practice.  So, HESC Vice President of Collection and Default Management, Joseph Catalano, hooked a brother up "by reducing his student loan payments 60 percent, purging his collection debts and blocking the garnishment of his wages, at a cost of more than $24,670 to state and federal taxpayers."

The bastard graduated in 1989 from Albany Law.  How much help did he really need?  Well, this was quite a tangled web.  This isn't the type of "favor" that's granted to you because you ask for it.  As it happened:
Catalano told investigators that he met McDermott after being called as a witness in the 2006 high-profile murder trial of Christopher Porco, who was convicted of murdering his father and attempting to murder his mother in their Delmar home. Catalano, Christopher Porco's former youth minister, testified that he went to the hospital the week of the 2004 attack and spoke to Porco for about three hours.
On the witness stand Catalano testified about Porco's behavior at the hospital, where his mother was undergoing multiple surgeries, and about conversations they had regarding the couple's home-alarm system and Porco's treatment by Bethlehem police."
So, I guess throwing bad guys in jail bonded these two for life.  Catalano professes ignorance as to why his subordinates "took steps to insure that McDermott's wages would not be garnished after failed payments. The inspector general said his delinquent loans date to 1991 and the current balance is nearly $60,000, including more than $8,000 in accrued interest."

My left ass cheek owes more money this McDermott fellow does.  Ha.  That's totally a joke.  I owe about that much.  But most of our readers owe double that amount.

McDermott claims that he didn't ask for any preferential treatment.  His story goes like this:
McDermott said he knew Catalano worked for HESC and only called him because he wanted to speak to someone after his account manager died.
"I needed to be assigned to a new account manager," McDermott said. "I never discussed the specifics of my account with Mr. Catalano. ... My student loan debt was not reduced by one penny due to any actions taken at HESC. I was, and continue to be, legally obligated for the entire amount of my student loan, plus fees and interest. The agreed upon payment schedule only extended the time it would take to repay this debt."  
Really?  Is this normal behavior?  If my "account manager" were to die, wouldn't that mean the harassing calls and letters would cease until the account was reassigned?  Wouldn't that be a good thing?  I can't imagine anyone would call to ask and ask for a new nemesis to be assigned,
 "Excuse me, but I haven't heard from you regarding my defaulted student loan.  I fear my account manager may have passed.  Can you please see to it that someone else is assigned ASAP?  Thank you."

Furthermore, this doesn't explain why his monthly payments didn't increase when he went to private practice and started earning significantly more than he did as a public servant.  Nor does it explain the following:
The inspector general's office said its probe showed that "from 2007 to the present, HESC reduced McDermott's monthly payments from $1,030 to $400, in direct violation of federal requirements. Later, when McDermott repeatedly failed to pay the $400, HESC cancelled his $2,111 in collection fees and continually protected him from having his wages garnished."
I have to say, I'm green with envy that this bastard could get help with is loans when there are so many others who are so much worse off that are sent down the river to die.  Most people who are in default owe far more than Mr. McDermott do and/or are unemployed.  I don't know why this guy deserved anyone's sympathy.  This is just another case of "it's not what you know, it's who you know."

Criminal charges may be forthcoming.

Does anyone here work for KHELC or The Student Loan People?  I could use a favor.


  1. If this guy was a prosecutor for 20 some odd years, shouldn't most of his loans be paid off by now?

  2. Good question, Ronson. If he was doing something like IBR, the way that it works is that you're paying pretty much ONLY interest until the loan is forgiven (and I imagine it was for longer than 10 years, obviously). Then, if you manage to earn more in private practice, you owe the balance plus the unpaid interest. He probably didn't make a dent in the loan and and owed interest as well. But I don't know why he fell behind in payments.

  3. I wonder how much going to collections really does to an unemployed person. There are no wages to garnish, most of us are judgment proof anyway. I suppose once you find out, you can figure out how to collect against anybody and it would help you as a lawyer.

  4. Hey all:

    Great website, much appreciated.

    You DO NOT want to go into default on your loans! I have personal experience with this. I defaulted about a year after graduating. I was self employed, so they couldn't garnish my wages. HOWEVER, they ruined my credit score (which was on the way to being ruined already). I stayed "off the grid" for about 6 years and never made a payment.

    After the 6th year I started to get my life & business turned around and I wanted to sit for the Texas bar. As part of the character fitness, I had to get current on student loan payments.

    I was paying about $1,600 a month the first year.

    I have been current on my loan payments for over 5 years now. I was looking at the outstanding balance a few months ago and couldn't figure out why it was so high. The loan company told me (can't get a straight answer) that:
    A). The 1st year's payments are just "penalty" payments and do not count towards principal or interest.
    B). OR 1/2 of the 1st years payments are collection fees, and don't count towards interest or principal.

    Those 1st years payments were a LOT OF MONEY. I am still not practicing, so it was all for nothing....

    DO NOT LET YOUR LOANS GET DELINQUENT. If you do, the loan companies will run wild with fees...

  5. 10:40, that is a shame. I don't see why you wanted to sit for the Texas Bar. Did you have employment as an attorney lined up? It seems like you made a terrible financial decision.

    Also, why didn't this clown have his loans paid off within 20 years?

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