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Common Review Initiative _____

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

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Common Review Initiative _____

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

  11. 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 Training

  12. Public Site www.nchelp.org Click on “Initiatives” Select “Common Review Initiative” CRI Web Presence

  13. CRI Public Site

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

  15. CRI Private Site

  16. CRI Private Site

  17. CRI Private Site

  18. CRI Private Site

  19. Questions? Mike Hawkes 804-267-7101 mhawkes@ecmc.org

  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 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

  36. 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

  37. 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

  38. 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

  39. CRI Chapter 3Deferments • Verify maximum number of months for deferment type not exceeded • Verify proper interest accrual • Verify lender reported deferment to theguarantor • Verify next payment due date timely

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

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

  42. 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

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

  44. 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

  45. 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

  46. 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

  47. 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

  48. 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

  49. 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

  50. 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 tolender/servicer

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