Post on 11-Dec-2015
Common Review Initiative_____
Mike Hawkes, ECMCBrent Dove, USA FundsPenny Hagan, MOHELA
CRI – A One-Year Update
Mike HawkesEducational 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/EdFund– 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• 1st 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 1Origination 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 1Origination 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 2Conversion 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 3Deferments
• Review deferment forms to ensure compliance
• Review written procedures • Verify borrower’s eligibility for
specific deferment• Verify length of deferment is
appropriate
CRI Chapter 3Deferments
• 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 4Forbearances
• Review forbearance forms to ensure compliance
• Review written procedures • Verify request documented and
processed timely• Verify length of forbearance
documented
CRI Chapter 4Forbearances
• Verify signed forbearance agreement obtained
• Verify borrower eligible for forbearance type granted
• Verify timely resumption of payments
CRI Chapter 5Due 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 6Payment Application & Rate
Changes• Review procedures for allocating
payments between principal, interest, etc.
• Determine how partial payments and prepayments are handled
CRI Chapter 6Payment 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 8Credit 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 9Purchase/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 10Consolidation 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 11NSLDS 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 ReviewClose-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 ReviewClose-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
317-806-1257bdove@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 x3362
Penny@mohela.com
Thank you for joining us!
Please be sure to complete your conference evaluation
form!Mike Hawkes, ECMCBrent Dove, USA FundsPenny Hagan, MOHELA