Presentation on theme: "Federal Perkins Loan Assignment Guide. ► Loan Assignment Regulations Sec. 674.50 Assignment of defaulted loans to the United States. (a)An institution."— Presentation transcript:
Federal Perkins Loan Assignment Guide
► Loan Assignment Regulations Sec Assignment of defaulted loans to the United States. (a)An institution may submit a defaulted loan note to the Secretary for assignment to the United States. DCL-CB-03-13, July 2003 ► Found on IFAP website. Assignment submissions mailed between June 21 & June 30 must have a postdated certification date of July 1.
► How to Assign Identify the accounts to be assigned. ► Age Trial Balance Report ► Balance of $25.00 or higher ► Accelerated or naturally matured ► Minimum two collection efforts Review files for required documents. ► Promissory note or certified copy ► Judgment or bankruptcy documents ► Social Security number
Complete Federal Perkins Assignment Form. ► Can order assignment form on UAS System ► 75% completed ► 3 copies of Assignment form ► 2 copies of Account History “Package” together assignment documents and submit.
► Submission Documents Checklist Required Documents ► Submission Package Manifest (R) ► ED Assignment Form Original (R) Expiration date 6/30/06 CB Form and Directions ► Two photocopies of Assignment Form (R) One to submit, and one for your records
Required Documents Continued… ► The Original Promissory Note(s) (R) ► Judgment Information (R) Transfer of judgment if applicable ► Bankruptcy Information (R) ► Due Diligence Documentation (R)
Optional Documents ► Signed Repayment Schedule (O) ► Complete Repayment History (O) ► Acceleration Notice (O) ► Documentation of Recall (O) ► Copies of Cancellation & Deferment Forms (O) Any of the optional items NOT included in the submission package must be retained by the institution for at least 3 years from the date the loan is assigned.
► Submission Documents Detailed… Submission Package Manifest ► Manifest (list) on institutional letterhead that includes information on the loan. ► Under type of loan you must list either; E (Defense)I (Direct)P (Federal Perkins) Borrower’s Name & SS#Type of Loan Interest Rate Total Amount Outstanding (Section D, #37) (Section D, #37) Adams, Samuel E Ross, Betsy P
Assignment Form ► The approved Department of Education Assignment Form must be used bearing the appropriate expiration date. ► Original signatures are preferred; however, a signature stamp may be used in the case of large submissions ► A response should be provided to all items on the Assignment Form.
Two Copies of the Assignment Form ► Submit one copy with original ► Retain on copy for the borrower’s file.
Original Promissory Note ► All P-notes submitted for assignment must be valid legal instruments ► All P-notes should contain; signatures, amounts, and dates of disbursements. ► If original P-note is no longer available and only a certified photocopy exits, the copy can be submitted. Include a statement signed by the appropriate official.
“Certified True Copy” I declare under penalty of perjury that the foregoing is a true and correct copy of the original promissory note: Signature________________ Title ____________________ Date ____________________
► If neither the original nor a photocopy is available, the loan may still be assigned. IF the institution has copies of signed checks, disbursement vouchers or history.
Judgment Information ► The Department does not accept assignment of loans for which the institution has obtained a judgment unless it transfers the judgment to the United States. “All rights, title, and interest of the undersigned in this judgment are hereby assigned to the United States of America.” ► Some states require the institution to notify the courts that rendered the judgment of the assignment.
► Any judgment that is included in the assignment must cite it’s interest rate and expiration date. ► If not on judgment, your institution’s attorney or authorized official assigning the loan must provide the information in a separate signed statement. ► If judgment has expired, consult your attorney about renewal of the judgment.
Bankruptcy Information ► If a bankruptcy petition has been filed and a ruling has not been made, the account cannot be submitted for assignment. ► If the courts rule in favor of the borrower and discharge the loan, the account should be canceled. ► If the courts rule against the borrower, the loan is eligible for assignment.
Complete Due Diligence History ► If the institution’s cohort default rate was less than 20% as of the June 30 of the second year preceding the year in which the assignment submission is made you are not required to submit documentation of due diligence. For example June 2004 for a June 2006 submission.
► Institutions must provide the following documented proof of due diligence Grace ending letters Past due notices 90-day telephone call attempt Skip tracing attempts Intent to accelerate Account acceleration and notice to the borrower Credit Bureau reporting Collection agency placement Litigation Documentation (if applicable)
► Mailing Directions All accounts submitted for assignment are to be mailed to: U.S. Department of Education Perkins Loan (NDSL) Assignment Processing Center P.O. Box 4136 Greenville, Texas Do not contact this address in writing of by telephone to inquire about the status of assignments or to clarify why assignments were rejected.
► Assignment Processing The accounts are reviewed individually. If all requirements are meet, the institution will receive documentation ► Report NCLM710B ► Notices are sent to the institutions address provided in the institution’s program participation agreement
Cure Process for Assigning Defaulted Loans Cure process for Defaulted Loans 1.The institution must locate the borrower ► Proven by: postal receipt by the borrower ► Documentation of conversation that includes borrower’s current address ► Documentation from address-search servicer (non- IRS) that includes the borrower’s current address. If the institution cannot locate the borrower, evidence of address search attempts will suffice.
2.The institution must send the borrower a letter informing the borrower of the loan’s defaulted status which must be resolved. 3.The institution must send the borrower a copy of the signed promissory note along with a new repayment schedule to be signed and returned.
4.If there is no response to these letters, the institution must initiate collection procedures, including overdue notices, account acceleration, collection agency referral, credit- bureau notification, litigation (if applicable), and recall
5.The institution must provide documentation that steps 1 through 4 have been completed. The institution must label this “Due Diligence Using Cure Process” 6.The institution must label each completed Perkins Assignment Form “Cure Process Submission” in large print on top of the form.
► Resubmission Procedures Corrections can be made directly on the returned Perkins Assignment Form, on a computer generated facsimile or a photocopy of the Assignment Form. Corrections should be done using blue or black ink. NEVER USE RED! Each change must have the initials of the person making the change.
Corrections must be clear and legible. The institution may prepare a new form is they wish. ► If so, the institution must resubmit the old Assignment Form with the new. If resubmitted more than 45 days after it is returned to the school, the certification date and interest due must be changed
If account is rejected due to a problem with any of the dates on the Form, the institution must ensure that all correlating dates are correct before resubmission ► i.e. Item #21 “date last grace period ended” make sure that item #22 “date of default” is still correct.
Resubmission must be clearly written on the envelope. An assignment package manifest must be included with each resubmission package. The “corrections worksheet” that accompanies every rejected assignment must be enclosed with each resubmission.
► Notification of Borrowers If the institution chooses to notify the borrower of the pending assignment to the Department it must take place 90 days prior to assignment.
► Payments from Assigned Borrowers Payments should be forwarded to: National Payment Center P.O. Box 4169-Perkins Loan (NDSL) Greenville, Texas Each payment must include borrower’s full name, SS#, and type of loan.
► Information Sources Questions on assignment process, status of submissions, or pertaining to the correction of rejected submissions: Federal Student Aid U.S. Department of Education Borrower Services, Collections Group Perkins Loan Assignments 830 First Street, N.E. Washington, D.C All inquiries must include institution’s Serial #
► General Instructions Complete form in black ink. Sign forms in blue ink – (the original and copy) All items on Assignment Form must be completed. N/A All financial information must be entered as dollars and cents. $ or $ All items requiring dates must be entered as mm/dd/yy. 01/01/03 Each borrower must have a Social Security #.
► Section A- Institutional Information #1 – Full name of submitting institution. ► If a branch campus, identify as such. #2 – Serial Number ► 4-digit campus based serial number. Found on institution’s campus based award letter. #3 - #6 – Full address of institution
► Section B - Certification #7 – #11 - Name of authorized official making the assignment, alternate contact, phone # and signature. #13 – Date of transferred assets ► Date of which the authorized official signs the Perkins Assignment Form. Shown as MM/DD/YYYY. ► Submissions that are mailed between June 21 and June 30 must bear a postdated certification date of the following July 1.
► Section A – Borrower Information #3 – Social Security # ► This is a mandatory field. A school ID number is not acceptable. #5 – Departure Date ► The date the borrower left your institution. “Separation Date”
► Section B- Cosigner Information #12 Social Security # of the cosigner ► Not required, however if one has been identified, please provide it.
► Section C – Loan Info: Historical #18 – Type of loan disbursed #19 – Interest rate on P-note. ► Or changed rate due to litigation and presence of a judgment. #20 – Date of last disbursement ► Not the original date of the loan. The date the last advance was prior to the departure date. #21 – Date of last grace period. ► Must show full 9 or 6 month grace period began after the departure date.
#22 Date of Default ► Date following the day on which the payment was due and not received. #26 – Reason for assignment ► Hardship, incarcerated, unemployed, liquidation, refusal to pay, address unknown, total and perm disability, other (please explain)
► Section D – Loan Info: Financial #27 – Original Amount borrowed ► This total should be what is reflected on the P-note or judgment. #28 – Amounts refunded ► Any amount refunded or never disbursed that reduced the principal amount the borrower is responsible.
► Section E – Cancellation Information #38 - #43 – Any cancellations that have been processed on the loan ► The institution is not required to provide the information.