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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
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
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
Thank you for joining us!
Please be sure to complete your conference evaluation
form!Mike Hawkes, ECMCBrent Dove, USA FundsPenny Hagan, MOHELA
