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Session 65

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

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Session 65

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  1. 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

  6. Insurance vs. Reinsurance Rates

  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 Reinsurance Requested From ED Amount Paid to Lender • Example: GA pays lender claim $9,800, based on thelender 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.

  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 – $1,000.00 (Outstanding Principal Balance – $993.27; Accrued Interest – $6.73) • Payoff Amount (for lender to purchase rehabilitated loan) – $1,185.00 [Outstanding Principal and Interest Balance of $1,000.00 plus Collection Cost of $185.00 ($1,000.00 * 18.5%)]

  19. MR-10, Rehabilitated Loan Refund

  20. MR-11, FFEL Consolidation Refund

  21. Secretary’s Fee GA Retention Reinsurance Complement

  22. MR- 12, Wage Garnishment

  23. MR-13, Default Collections

  24. 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

  25. 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, 2006. • No collection costs no fee due, • Any collection costs the Secretary is due up to 8.5%

  26. 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.. MR 16, Total

  27. 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

  28. 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.

  29. 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

  30. 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: 1 - 90 Days Delinquent • MR-35: 91 - 180 Days Delinquent

  31. MR-33 - MR-40, Delinquency by Debt (Continued) • MR-36: 181 - 365 Days Delinquent • MR-37: 1 - 2 Years Delinquent • MR-38: 2 - 6 Years Delinquent • MR-39: 6 - 10 Years Delinquent • MR-40: Over 10 Years Delinquent

  32. 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.

  33. Technical Slide We appreciate your feedback and comments. Barbara Johnson Sandra Simmons 202.377.3327 202.377.3332 BJ.Johnson@ed.gov Sandra.Simmons@ed.gov Or: FSA_GAR@ed.gov 202.275.3481 202.275.3481

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