Common Review Initiative Mike Hawkes ECMC Brent Dove
Common Review Initiative _____ Mike Hawkes, ECMC Brent Dove, USA Funds Penny Hagan, MOHELA
CRI – A One-Year Update Mike Hawkes Educational Credit Management Corporation
CRI Concept • Guarantors are combining resources to conduct a single review of large lenders and servicers • These CRI reviews will go toward meeting the requirements of 682. 410(c)(1) for each participating CRI guarantor
CRI Goals • Improve the quality of lender program reviews conducted by guarantors (including non-CRI reviews) • Reduce redundancy of reviews by guarantors
CRI Approval • In March, ED approved CRI as a pilot project. • Pilot runs from January 1, 2004 through December 31, 2005. • Working on measurements of effectiveness to evaluate whether CRI should be permanent
Participating CRI Guarantors • 33 guarantors have signed CRI participation agreements • Non-participants currently are: – Alaska – CSAC/Ed. Fund – New Hampshire – North Carolina
CRI Administration • Formed a CRI Council – meets monthly via conference call • Formally adopted a CRI review guide and workbooks for attribute testing • Adopted an administrative guide
CRI Leadership • Leaders are: – Aaron Cook – NELA Chair for 2004 -05 – Rick Buckingham – USA Funds Chair for 2006 -07 – Jim Elvekrog – Great Lakes Secretary – Carol Lindsey – TG Treasurer
CRI On-site Reviews • CRI review teams have conducted five on-site reviews in 2004: – CFS/Suntech – MOHELA – Wells Fargo – ACS – AES
2005 CRI Reviews • • Edfinancial Services KHESLC Nelnet Sallie Mae • • Educaid Citicorp Regions Bank Potential for two additional reviews
CRI Training • October 26 -27 face-to-face meeting • Topics on agenda included: – Review scheduling and preparation – Workbook review and practice – Preparing and sending the report – IDEA software potential – CRI website
CRI Web Presence • Public Site – www. nchelp. org – Click on “Initiatives” – Select “Common Review Initiative”
CRI Public Site
CRI Private Site • Private site – Facilitate review team preparation – Storage of review files, workpapers – Security for each folder customized
CRI Private Site
CRI Private Site
CRI Private Site
CRI Private Site
Questions? Mike Hawkes 804 -267 -7101 mhawkes@ecmc. org
CRI – A Reviewer’s Perspective _____ Brent Dove, USA Funds
Review Scheduling • Contact lender/servicer to confirm dates are acceptable • Contact team members to ensure no conflicts exist • Contact ED lead reviewer • Obtain list of required reviews from CRI Review Scheduling & Lender Selection Workgroup
Review Planning • Contact guarantors with required reviews – Ensure list of lender codes is correct – Request error rate percentages for NSLDS • At least 75 days before the review, contact the lender/servicer – Verify review dates – Collect contact information – Send and discuss electronic questionnaire
Engagement Letter • List all guarantor names and corresponding code in body of letter • Specify period of review scope • Include list of data elements to be provided • Attach list of lender codes to be reviewed • Specify a “need by date” for data elements
Engagement Letter • Send 60 days before on-site review • Send courtesy copy of letter to all lenders for which the CRI review is being conducted at the servicer • Send courtesy copy of letter to ED lead reviewer
Engagement Letter • Questionnaire • Sample copies of due diligence notices • Copies of audits and program reviews completed within last two federal fiscal years • Data file containing all data elements
Data File • • Borrower name and SSN Lender ID Servicer ID Guarantor ID Unique loan ID Guarantee date Loan type Subsidy indicator
Data File • • Loan period begin and end dates 1 st disbursement date and amount Current loan status Loan status date Cancellation date and amount Refund date and amount Out-of-school date
Data File • • • Interest rate Current principal balance Capitalized interest balance Deferment begin and end dates Forbearance begin and end dates Date entered repayment
Data File • • • Total payments Days delinquent Claim paid date Loan purchase date Loan sale date Loan transfer date
School as Lender • Send letter to school, requesting the following documentation: – Organizational chart – Financial statements – Description of how I & SA payments were used for need-based grant programs
Random Samples • Run servicer’s data files through IDEA software to select a random sample • A sample of 179 accounts is selected for each CRI chapter • At least 30 days before the review, send a core sample of 29 accounts for each testing area
On-site Review • Entrance conference • Remain in constant contact with lender/servicer staff • Attend scheduled meetings • Exit conference
CRI Chapters • Chapter 1 - Origination and Disbursement • Chapter 2 – Conversion to Repayment • Chapter 3 - Deferments • Chapter 4 – Forbearances • Chapter 5 – Collection and Claims
CRI Chapters • Chapter 6 – Payment Application & Rate Changes • Chapter 8 – Credit Bureau Reporting • Chapter 9 – Purchase/Sale/Transfer • Chapter 10 – Consolidation Loans • Chapter 11 – NSLDS Reporting
CRI Chapter 1 Origination and Disbursement • Verify each loan is supported by valid prom note • Verify correct interest rate determined • Verify lender provided required disclosure info • Verify lender obtained credit history for PLUS credit check
CRI Chapter 1 Origination and Disbursement • Verify PLUS checks made co-payable • Verify proper negotiation/consummation • Verify proper reissue of disbursement • Verify proper late disbursement • Verify cancellations/refunds applied correctly
CRI Chapter 2 Conversion to Repayment • Review written procedures for conversion to repayment • Verify out-of-school date • Verify borrower provided timely with complete repayment information • Verify timely conversion • Verify repayment terms correct
CRI Chapter 3 Deferments • Review deferment forms to ensure compliance • Review written procedures • Verify borrower’s eligibility for specific deferment • Verify length of deferment is appropriate
CRI Chapter 3 Deferments • Verify maximum number of months for deferment type not exceeded • Verify proper interest accrual • Verify lender reported deferment to the guarantor • Verify next payment due date timely
CRI Chapter 4 Forbearances • Review forbearance forms to ensure compliance • Review written procedures • Verify request documented and processed timely • Verify length of forbearance documented
CRI Chapter 4 Forbearances • Verify signed forbearance agreement obtained • Verify borrower eligible forbearance type granted • Verify timely resumption of payments
CRI Chapter 5 Due Diligence/Cure/Claim • Review written procedures for collection due diligence • Review due diligence letter language • Verify actual dates of phone calls selected from servicing history • Verify timeliness of due diligence letters and phone calls • Verify skiptracing initiated timely
CRI Chapter 6 Payment Application & Rate Changes • Review procedures for allocating payments between principal, interest, etc. • Determine how partial payments and prepayments are handled
CRI Chapter 6 Payment Application & Rate Changes • Determine procedure for handling credit balances and write-offs of small balances • Verify current interest rate is correct • Verify correct calculation of capitalized interest
CRI Chapter 8 Credit Bureau Reporting • Verify that lender/servicer reported FFEL loan amounts within 90 days of disbursement • Verify correct outstanding balance reported • Verify delinquency status reported • Verify payment in full reported
CRI Chapter 9 Purchase/Sale/Transfer • Review borrower notification to ensure proper information indicated • Review written procedures for processing purchases/sales/transfers • Verify borrower notified timely • Verify guarantor notified timely
CRI Chapter 10 Consolidation Loans • Verify all required forms completed accurately • Verify that LVC completed by holder of each loan consolidated • Verify weighted average of interest rates properly calculated • Verify length of repayment period correctly calculated • Verify first payment due date set timely
CRI Chapter 11 NSLDS Reporting • Verify current loan status matches lender history • Verify outstanding principal balance amount matches lender history • Verify outstanding principal balance date is accurate • Review written procedures for NSLDS reporting • Review submission error summary reports • Review unreported loan rates
Report Writing and Review Close-out • Lender/servicer given two weeks to resolve preliminary findings discussed at exit conference • Reviewer will compile draft report after servicer’s response is received
Report Writing and Review Close-out • 45 days after servicer’s response deadline, program review report will be sent • Lender/servicer has 30 days to respond to report and each subsequent response • Closing letter will be sent to lender/servicer
Questions? Brent Dove 317 -806 -1257 bdove@usafunds. org
CRI – A Servicer’s Perspective _____ Penny Hagan, MOHELA
CRI Concept “What we call ‘Progress’ is the exchange of one nuisance for another nuisance. ” Havelock Ellis
Recommended Servicer Review Preparation • • • Data selection Staff System Documents Reviewer working environment
Data Selection • Discuss system options/limitations • Understand the requested criteria • Understand the reasoning behind the requested criteria • Provide data for selections well in advance
Staff Preparation • • • Questionnaire Experience Availability Entrance Conference Exit Conference
Technical • Discuss system needs • Assist reviewer in understanding proprietary system utilization • Assist reviewer in extracting information from the system
Documents • Discuss document needs • Discuss document layout/design • Have all documents ready for reviewer upon arrival
Working Environment • Clean, well lit, ample space, communication capabilities • Adequate technical accommodation • Access to necessary systems
Helpful Hints • Communicate • Cooperate • Clarify
Exit Conference • • Attendees General discussion of process Discussion of collected information Discussion of additional needs (if any)
Post Review • Continue communication with CRI lead • Do not hesitate to plead a case • Retain copies of all pertinent documents
Response • Response required for CRI and DE – DE Letter of Appeal (if necessary) • Discuss response with appropriate staff • Provide response within outlined timeframe • Closing letter final response from CRI team
Questions? Penny Hagan 636 -532 -0600 x 3362 Penny@mohela. com
Thank you for joining us! Please be sure to complete your conference evaluation form! Mike Hawkes, ECMC Brent Dove, USA Funds Penny Hagan, MOHELA
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