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Common Review Initiative _____ Mike Hawkes, ECMC Brent Dove, USA Funds Penny Hagan, MOHELA.

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Presentation on theme: "Common Review Initiative _____ Mike Hawkes, ECMC Brent Dove, USA Funds Penny Hagan, MOHELA."— Presentation transcript:

1 Common Review Initiative _____ Mike Hawkes, ECMC Brent Dove, USA Funds Penny Hagan, MOHELA

2 CRI – A One-Year Update Mike Hawkes Educational Credit Management Corporation

3 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

4 CRI Goals Improve the quality of lender program reviews conducted by guarantors (including non-CRI reviews) Reduce redundancy of reviews by guarantors

5 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

6 Participating CRI Guarantors 33 guarantors have signed CRI participation agreements Non-participants currently are: –Alaska –CSAC/EdFund –New Hampshire –North Carolina

7 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

8 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

9 CRI On-site Reviews CRI review teams have conducted five on-site reviews in 2004: –CFS/Suntech –MOHELA –Wells Fargo –ACS –AES

10 2005 CRI Reviews Edfinancial Services KHESLC Nelnet Sallie Mae Educaid Citicorp Regions Bank Potential for two additional reviews

11 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

12 CRI Web Presence Public Site – –Click on “Initiatives” –Select “Common Review Initiative”

13 CRI Public Site

14 CRI Private Site Private site –Facilitate review team preparation –Storage of review files, workpapers –Security for each folder customized

15 CRI Private Site




19 Questions? Mike Hawkes 804-267-7101

20 CRI – A Reviewer’s Perspective _____ Brent Dove, USA Funds

21 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

22 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

23 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

24 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

25 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

26 Data File Borrower name and SSN Lender ID Servicer ID Guarantor ID Unique loan ID Guarantee date Loan type Subsidy indicator

27 Data File Loan period begin and end dates 1st disbursement date and amount Current loan status Loan status date Cancellation date and amount Refund date and amount Out-of-school date

28 Data File Interest rate Current principal balance Capitalized interest balance Deferment begin and end dates Forbearance begin and end dates Date entered repayment

29 Data File Total payments Days delinquent Claim paid date Loan purchase date Loan sale date Loan transfer date

30 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

31 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

32 On-site Review Entrance conference Remain in constant contact with lender/servicer staff Attend scheduled meetings Exit conference

33 CRI Chapters Chapter 1 - Origination and Disbursement Chapter 2 – Conversion to Repayment Chapter 3 - Deferments Chapter 4 – Forbearances Chapter 5 – Collection and Claims

34 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

35 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

36 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

37 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

38 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

39 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

40 CRI Chapter 4 Forbearances Review forbearance forms to ensure compliance Review written procedures Verify request documented and processed timely Verify length of forbearance documented

41 CRI Chapter 4 Forbearances Verify signed forbearance agreement obtained Verify borrower eligible for forbearance type granted Verify timely resumption of payments

42 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

43 CRI Chapter 6 Payment Application & Rate Changes Review procedures for allocating payments between principal, interest, etc. Determine how partial payments and prepayments are handled

44 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

45 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

46 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

47 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

48 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

49 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

50 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

51 Questions? Brent Dove 317-806-1257

52 CRI – A Servicer’s Perspective _____ Penny Hagan, MOHELA

53 CRI Concept “What we call ‘Progress’ is the exchange of one nuisance for another nuisance.” Havelock Ellis

54 Recommended Servicer Review Preparation Data selection Staff System Documents Reviewer working environment

55 Data Selection Discuss system options/limitations Understand the requested criteria Understand the reasoning behind the requested criteria Provide data for selections well in advance

56 Staff Preparation Questionnaire Experience Availability Entrance Conference Exit Conference

57 Technical Discuss system needs Assist reviewer in understanding proprietary system utilization Assist reviewer in extracting information from the system

58 Documents Discuss document needs Discuss document layout/design Have all documents ready for reviewer upon arrival

59 Working Environment Clean, well lit, ample space, communication capabilities Adequate technical accommodation Access to necessary systems

60 Helpful Hints Communicate Cooperate Clarify

61 Exit Conference Attendees General discussion of process Discussion of collected information Discussion of additional needs (if any)

62 Post Review Continue communication with CRI lead Do not hesitate to plead a case Retain copies of all pertinent documents

63 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

64 Questions? Penny Hagan 636-532-0600 x3362

65 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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