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FFEL Loan Purchase Commitment Program

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Bill of Sale documents to be submitted to ED on the fifth (5) business day prior ... Bill of Sale to be used by lenders/sponsors and custodians for loans in which ... – PowerPoint PPT presentation

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Title: FFEL Loan Purchase Commitment Program


1
FFEL Loan PurchaseCommitment Program
  • Master Loan Sales Agreement and Operations
    Webinar
  • September 12, 2008

2
  • Presenters
  • Jeff Baker
  • Director Policy Liaison Implementation
  • Federal Student Aid
  • U.S. Department of Education
  • Margaret Ayanian
  • Business Operations
  • Federal Student Aid
  • U.S. Department of Education

3
Logistics
  • Title Loan Purchase Program
  • Purchase Operations
  • Date September 12, 2008
  • To Participate You Must
  • Logon at URL provided in registration
    confirmation email and
  • Dial in to 1-888-324-6476 Confirmation number
     MGERHARD
  • Additional information on the Loan Purchase
    Programs at www.federalstudentaid.ed.gov/ffelp

4
Legal Authorities
  • Ensuring Continuing Access to Student Loans Act
    of 2008 (P.L. 110-227)
  • HR 5715
  • Signed by the President on May 7, 2008
  • Strengthened GA Lender of Last Resort Program
  • Provided Secretary authority to purchase FFEL
    loans
  • Cannot provide advanced funding to lenders
  • Federal Register Notice
  • Required by statute
  • Draft Posted to IFAP on June 24, 2008
  • Official Publication July 1, 2008

5
Program Objectives
  • Ensure that eligible students and parents receive
    federal student loans for the 2008-2009 academic
    year
  • Support the FFEL Program as a successful
    private/public partnership
  • Ensure no net cost to the federal government
  • No statutory authority to provide advance funding

6
Two Programmatic Components
  • Loan Participation Purchase Program
  • Commitment by ED to purchase participation
    interests in eligible 2008-2009 FFEL loans
    through September 30, 2009
  • EDs purchase will provide immediate liquidity
  • To terminate EDs participation interest lender
    repays ED with defined yield.

7
Two Programmatic Components
  • Loan Purchase Commitment Program
  • Commitment by ED to purchase eligible 2008-2009
    FFEL loans through September 30, 2009
  • Any FFEL lender/holder
  • Loans must be fully disbursed to be purchased
  • 45 day advance notice of loans to be sold
  • EDs commitment has value in financial markets

8
Webinar Objectives
  • Purpose To provide high level overview of the
    operational processes involved in notification
    and execution of required documents for the sale
    of loans to the Department for the Loan Purchase
    Commitment Program.
  • Target Audience Personnel at servicers and
    lenders responsible for loan sale operations.
  • Limitations Will not include information on the
    Loan Participation Purchase Program. This
    information was provided in other formats,
    including previous Webinars.

9
Agenda
  • Walkthrough of Sales Process in Detail
  • 45 Day Notice of Intent to Sell Loans
  • Schedule of Available Sale Dates
  • Loan Transfer/Conversion File Requirements
  • Pre-Sale Reporting to Selling Lender
  • Preparation of Bill of Sale documents
  • Settlement at Purchase Date and Funding
  • Multiple Sale Transactions - Example
  • Post-Settlement Reconciliation
  • Loan Transfer Reporting
  • Collateral Documentation Requirements
  • Questions

10
Loan Purchase Instruction Package
  • Instructions for submission of Loan Purchase
    documents described during this webinar are
    available at www.federalstudentaid.ed.gov/ffelp
  • Electronic Announcements
  • 23 Initial Document Submission Instructions
  • 26 Bill of Sale Submission Instructions and
  • 27 Loan Transfer Conversion File Layout
    Submission Instructions

11
45-Day Notice
  • See Electronic Announcement 23 for
  • 45-Day Notice of Intent to Sell Loans form and
  • Instructions for submission of the form and
    related schedule
  • 45-Day Notice of Intent to Sell Loans includes a
    Projected Loan Schedule Summary of Loans to be
    Sold.
  • Only Eligible Loans
  • 45-Day Notice of Intent to Sell is sent as a PDF
    attachment to an email addressed to
    ED.Servicer_at_ed.gov. Subject line should say
    45-Day Notice of Intent to Sell.

11
12
45-Day Notice
  • 45-Day Notice must be received by the Department
    not less than 45 Days before the Requested Sale
    Date.
  • Separate 45-Day notices (may be for the same
    Purchase Date) for
  • Straight PUT
  • PUT from a Participation Interest
  • Loans for each third party lien holder
  • ED will schedule the Purchase Date. If requested
    Purchase Date during ED blackout period, next
    available Purchase Date will be used. High
    volume on a day may result in a change to the
    requested Purchase Date.

12
13
45-Day Notice
  • Within 48 hours of receipt of the 45-Day Notice
    of Intent to Sell Loans, the Seller will receive
    an acknowledgement of receipt from ED with the
    scheduled Purchase Date.
  • Seller will be requested to provide
  • Servicer contact information
  • Secured Lender (Lien Holder) information, if
    applicable
  • Third party payment instructions, if applicable.

13
14
Schedule of Available Purchase Dates
  • Selling Lenders are encouraged to schedule sale
    dates throughout the month

14
15
Schedule of Available Sale Dates - Example
15
16
Conversion Transfer File Requirements
  • If first time sale to the Department, ED Servicer
    will work with Sellers Servicer to coordinate
    intersystem test of the first data file.
  • Nine (9) Business Days prior to Purchase Date,
    Sellers Servicer will provide ED Servicer the
    Loan Transfer/Conversion File in the required
    format.
  • Loans in detail report must be same loans as
    reported with data from the 45-Day Notice of
    Intent to Sell.
  • Loan Transfer/Conversion File specifications are
    attached to Electronic Announcement 27.

17
Conversion Transfer File
  • ED Servicer will perform eligibility and data
    integrity edits on the loan data in the
    conversion file.
  • Sellers Servicer will be contacted by phone and
    email, during the three (3) business days after
    receipt of the conversion file.
  • ED Servicer will work with the Sellers Servicer
    to resolve any loan eligibility and data
    exceptions. In eligible loans will will be
    removed from the conversion file.
  • Revised sales totals (if needed) will be
    calculated by the ED Servicer and reported on
    standard Pre-Sale Reports.

17
18
Pre-sale Reporting to Selling Lender
  • Six (6) business days prior to sale, ED Servicer
    will deliver Final Pre-Sale Reports to the
    Seller.
  • Pre-Sale Reports will include a calculation of
    the final sale purchase price including principal
    and interest outstanding through sale date,
    return of the 1 origination fee, and 75.00 per
    loan.
  • Pre-Sale Reports will also include a detailed
    listing of loans included in the sale.

19
Pre-sale Reporting to Selling Lender
  • Seller will review the Pre-Sale Reports to
    confirm loans included in sale and final purchase
    price. Loans in detail report must be same loans
    as reported in conversion file less exceptions.
  • After reviewing the Pre-Sale reports, Seller will
    prepare the Bill of Sale and required Loan
    Schedule.

19
20
Preparation of Bill of Sale Documents
  • Bill of Sale documents to be submitted to ED on
    the fifth (5) business day prior to Purchase
    Date.
  • Bill of Sale documents include
  • o    Formal Bill of Sale
  • o    Final Loan Schedule Summary
  • o    Loan Schedule (Detail Listing of Loans
    Sold
  • o    Security Release Certification (if
    applicable)
  • o    Notice of Assignment and Designation of
    Payee Financial Institution Form (optional) or
  • a subsequent notification of receipt of funds
    by the Secured Lender

20
21
Preparation of Bill of Sale
  • Two forms of Bill of Sale (see EA 27)
  • Bill of Sale to be used by lenders/sponsors and
    custodians for loans in which the department
    holds a Participation Interest under the Loan
    Participation Purchase Program.
  • Bill of Sale form to be used for loans that will
    be sold directly by the lender to the Department,
    outside of a participation interest.
  • Will also identify of any loans subject to a
    security interest that are to be PUT to the
    Department.
  • Submitted as PDF attachment to email addressed to
    ED.servicer_at_ed.gov. Subject line should indicate
    Bill of Sale and loan sale date.

21
22
Multiple Sale Transactions - Example
  • Lender wants to sell 1,000 loans
  • 700 with no security interest
  • 200 with a security interest from secured party
    1
  • 100 with a security interest from secured party
    2
  • Treat as 3 separate sales, with either
  • Same Purchase Date (or)
  • Staggered Purchase Dates

22
23
Document Flow Example No Security Interest
  • Sale of 700 Loans (no security interest)
  • 45 Day Notice with Projected Loan Schedule
    Summary of Loans to be Sold
  • Pre-Sale and Settlement
  • Formal Bill of Sale
  • Final Loan Schedule Summary of Loans Sold
  • Final Loan Schedule Loan Detail

23
24
Document Flow Example Security Interest
  • Sale of 200 Loans with a Security Interest
  • 45 Day Notice with Projected Loan Schedule
    Summary of Loans to be Sold
  • Pre-Sale and Settlement
  • Formal Bill of Sale, with named Secured Lender
  • Final Loan Schedule Summary of Loans Sold
  • Final Loan Schedule Loan Detail
  • Security Release Certification
  • Notice of Assignment and Designation of Payee
    (optional) or notification that Secured Party has
    received funds

24
25
Collateral Documentation
  • By Purchase Date, Seller transmits loan documents
    to the ED Servicer. Loan documents include
  • Original or copy of the Master Promissory Note
    (MPN)
  • School certification record if MPN not executed
    for the loan - Prior MPN used.
  • Electronic session data if MPN was executed
    electronically (e-signed). All data that
    demonstrates the e-sign process that was used by
    the borrower, including the electronic signature.
    Session data must contain date and time audit
    trails.

25
26
Settlement at Purchase Date
  • ED Servicer will process the sale on the required
    loan Purchase Date. Ownership of loans will
    transfer to ED as of the Purchase Date.
  • ED Servicer will assume servicing for all loans
    included in the sale, including
  • Notifying borrower
  • Reporting to the Guaranty Agency at end of
    Purchase Date month
  • Reporting to NSLDS.

27
Funding at Purchase Date
  • Payment for the loan sale will be directed to
    Sellers existing 799 payment bank account
    information, unless
  • Loans are from a Participation Interest, then
    funds will be sent directly to the Custodian.
  • Seller has requested payment be made to a third
    party with security interest in the loans.

27
28
Reconciliation and Adjustments
  • Reconciliation will be performed by the ED
    Servicer comparing the final amount funded to the
    Bill of Sale totals and the Final Loan Conversion
    Reports. If exceptions are noted, ED will work
    with the Seller.
  • Post sale adjustments received by the Seller,
    such as loan cancellations, school refunds, or
    borrower payments, must be forwarded to the ED
    Servicer for processing and application to the
    borrower accounts.

28
29
Loan Transfer Reporting
  • After loan sale, the ED Servicer will report to
    the Guaranty Agency the sale of loans to ED and
    that the GA no longer has responsibility for the
    loans.
  • The GA will receive and process the loan sale
    (transfer) transactions and report such to NSLDS.
  • The GAs Forms 2000 annual reporting will show
    the loans transferred out.
  • After loan sale, the ED Servicer will provide
    on-going status and update reporting to NSLDS for
    the ED purchased loans.

30
Questions
Questions may be asked now or submitted to the
following e-mail address loan.purchase_at_ed.gov
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