Session 65 Guaranty Agency Financial Report for Beginners (ED Form 2000) Barbara Johnson Sandra Simmons

2 Agenda Introduction Insurance vs. Reinsurance “Secretary’s Share” How is it Calculated How Much Do I Get “GA Retention” GAFR Line-by-Line Statement of Account (SOA) Web Application Demo (Navigation and Running Reports)

3 Introduction What is the Guaranty Agency Financial Report FSA’s Role GA’s Role

4 Insurance vs. Reinsurance Insurance –Amount the GA Pays the Lender –Based on 1st Disbursement of Loan Reinsurance –Amount ED Pays the GA Based on 1st Disbursement of Loan Reinsurance Complement

5 Insurance vs. Reinsurance Rates

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7 Secretary’s Share The amount of the collections, which a guaranty agency must return to ED, is referred to as the “Secretary’s equitable share” of collections. The formula for calculating the Federal share of collections is: Total Collected less Reinsurance Complement less GA Retention = Secretary’s Share of Collections.

8 How Much Do I Get – GA Retention The guaranty agency is also allowed to retain— –30 percent of the amount of collections received prior to October 1, 1993, –27 percent of the amount of collections received on or after October 1, 1993 and before October 1, 1998, –24 percent of the amount of collections received on or after October 1, 1998 and before October 1, 2003, and –23 percent of the amount of collections received on or after October 1, 2003.

9 Statement of Account

10 MR-1, Claims Paid Reinsurance –Claim Categories Default Exempt/LLR Death/Disability Closed School/False Certification Bankruptcy Unpaid Refunds/ Discharges

11 MR-1-A, Defaults Example: GA pays lender claim $9,800, based on the lender requested amount of $10,000 on a default loan first disbursed on or after 10/1/98 and before 7/1/06 (i.e.,.95% Reinsurance Reimbursement Rate. The guaranty agency’s reporting would look like this. Reinsurance Requested From ED Amount Paid to Lender

12 MR-2, Borrower Payment Return Refund of Default Collections to Borrower –GA Refunds Borrower’s Collection –GA Requests Reimbursement from ED Claim Originally Paid as Default Borrower Made Payments Subsequent Change in Status from Default to –Closed School –False Certification

13 MR-3, Status Changes Loan Status Changes from Default to: –Death/Disability –Bankruptcy –Closed School/False Certification GA is Entitled to Additional Reinsurance –If, Original Claim paid at < 100% Account Balance at Conversion (MR-20 through MR-23)

14 MR-4, TOP Overpayments GA Requests Reimbursement from ED –After Treasury Offset Activity has occurred –Which Results in a Refund to Borrower –Where Offset Exceeds Balance Due on Borrower Account

15 MR-5 & 6, Repurchases Full Refund of Reinsurance –Current and Prior Fiscal Year Reduced by Borrower Payments Refunded at Claim Reimbursement Rate Impact on “Trigger” –Repurchase Agreement –No Repurchase Agreement

16 MR-7 & 8, Partial Refunds Partial Refund of Reinsurance –Lender Refunds –Current and Prior Fiscal Year Reduced by Borrower Payments Refunded at Claim Reimbursement Rate Impact on “Trigger” –Repurchase Agreement –No Repurchase Agreement

17 MR- 9, Overstated Claims Principal Amount = Decrease in Amounts for Principal, Lender and GA Claim Interest –Claim Categories MR-9-A Default MR-9-B Exempt/Lender of Last Resort MR-9-C Death/Disability MR-9-D Closed School/False Certification MR-9-E Bankruptcy (All chapters)

18 Example: Rehabilitation Loan Calculation Reinsurance Reimbursement Rate – 98% Outstanding Principal and Interest Balance at Time of Rehabilitation – $1, (Outstanding Principal Balance – $993.27; Accrued Interest – $6.73) Payoff Amount (for lender to purchase rehabilitated loan) – $1, [Outstanding Principal and Interest Balance of $1, plus Collection Cost of $ ($1, * 18.5%)]

19 MR-10, Rehabilitated Loan Refund

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21 MR-11, FFEL Consolidation Refund

22 Reinsurance Complement GA Retention Secretary’s Fee

23 MR- 12, Wage Garnishment

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25 MR-13, Default Collections

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27 MR-14, Bankruptcy Collections –All Chapters (7, 11, 12 & 13) Principal Amount = Amount Applied to Principal and Purchased Interest Interest Amount = Amount Applied to Accrued Interest Other Amounts =Other Charges, if any

28 MR-15, Default FFEL Consolidated by DL Fee Secretary’s fee on defaulted FFEL Loans Consolidated by DL –GA Collection Cost 18.5% –Up to 8.5% due to the Secretary This fee is effective for defaulted loans consolidated on or after October 1, No collection costs no fee due, Any collection costs the Secretary is due up to 8.5%

29 MR 16, Total Amount Due To/From Guarantor –Total equals the sum of amounts reported in MR-1 through MR-15. –The total will be displayed as a positive or negative amount Positive represents the amount due to the guarantor. Negative represents amount due ED. –Amounts due ED from monthly processing may be offset by pending Account Maintenance Fee or Loan Processing and Issuance Fee payments..

30 MR-17 - MR-23, Non Payment Activity –Must be submitted Monthly –Adjustments to the Federal Receivable Balance –MR-17 - MR-19 Treasury Offset Transactions –MR-20 - MR -23 Status Changes - Account Balance at Conversion Include Exempt Claims in MR-20 through MR-22

31 MR 24 through MR 31, Agency Accruals Report Fiscal Year-To-Date Report Principal, Interest and Other Charges –MR-24 Collection Terminations –MR-25 Compromises –MR-26 Agency’s Accruals Accrued Interest calculated by the GA on the loan principal of a claim for collection from the borrower during the fiscal year.

32 MR 24 through MR 31, Agency Accruals Other Charges including the the total amount of fees, penalties, collection charges, and any other charges which have accrued for any loan. MR-27 Default FFEL Consolidated by DLP MR-28 Subrogated Loans (Assignments) –Loans accepted into the Debt Collection Management System MR-29 Default Loans Transferred Out MR-30 Default Loans Transferred In MR-31 Other Transactions Affecting the Federal Receivable

33 MR-32 – MR-40, Delinquency by Debt MR-32 Ending Balance MR-33 through MR-40: Delinquency by Debt –Cumulative from inception of the FFELP Program Delinquency by Debt MR-33: Not Delinquent (Current Loans) MR-34: Days Delinquent MR-35: Days Delinquent

34 MR-33 - MR-40, Delinquency by Debt (Continued) MR-36: Days Delinquent MR-37: Years Delinquent MR-38: Years Delinquent MR-39: Years Delinquent MR-40: Over 10 Years Delinquent

35 MR-41 & 42, Bankruptcy Bankruptcy –MR-41 Ending Balance on Bankruptcies Balance is reported fiscal year-to-date. –MR-42 Bankruptcies Transferred Dollar amount of bankruptcies transferred to ECMC fiscal year-to-date.

36 Technical Slide We appreciate your feedback and comments. Barbara Johnson Sandra Simmons Or: