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) • Web Application Demo (Navigation and Running Reports)

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Introduction
• What is the Guaranty Agency Financial Report • FSA’s Role • GA’s Role

Guaranty Agency Financial Report (GAFR) ED Form 2000

In t u io s r ct n Gu e id
Re is d Ju e 2 0 v e : n 06

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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

4

Insurance vs. Reinsurance Rates
Description Loan Amount/ Claim Amount $1,000.00 $1,000.00 Reimburse- Reimburse- Reimburse- Reimbursement Rate ment ment Rate ment (GA to Amount to (ED to GA) Amount to Lender) Lender GA 100% $1,000.00 100% $1,000.00 100% $1,000.00 98% $980.00

Lender Insurance (Loan 1st Disbursed Before 10/1/93) Lender Insurance (Loan 1st Disbursed On/After 10/1/93 and Before 10/1/98) Lender Insurance (Loan 1st Disbursed On/After 10/1/98 and Before 7/1/06)

$1,000.00

98%

$980.00

95%

$931.00

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Insurance vs. Reinsurance Rates
Description Lender Insurance (Loan 1st Disbursed On/After 7/1/06) Lender Insurance for Exempt Claims (Loan 1st Disbursed Before 7/1/06) Lender Insurance for Exempt Claims (Loan 1st Disbursed On/After 7/1/06) Exceptional Performer (Claim Submitted Before 7/1/06) Exceptional Performer (Claim Submitted On/After 7/1/06) Loan Amount/ Claim Amount $1,000.00 $1,000.00 Reimbursement Rate (GA to Lender) 97% 98% Reimbursement Amount to Lender $970.00 $980.00 Reimbursement Rate (ED to GA) 95% 95% Reimbursement Amount to GA $921.50 $931.00

$1,000.00 $1,000.00 $1,000.00

100% 100% 99%

$1,000.00 $1,000.00 $990.00

100% 95% 95%

$1,000.00 $950.00 $940.50

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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.
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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.
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Statement of Account
Category 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Loans In Repayment 5% Trigger 9% Trigger Amount Requested Fiscal Year to Date Dollars Paid Fiscal Year to Date Rehabilitated Loans Applied Refunds Applied Trigger Basis Amount Percent of Request Paid Trigger Rate Beginning Balance Outstanding Balance Interest Claims Paid Amount (All Claim Categories) Borrower Payment Returns Status Changes TOP Ov erpayments Repurchases/Refunds/Ov erpayments CFY

Requested Amount Due To/(From) Guarantor 5,128,162,386.00 $256,408,119.30 $461,534,614.74 $23,433,672.50 $23,043,226.70 $1,581,819.43 $818,499.79 $20,642,907.48 98% 0.40% $999,999,999,999.99 $999,999,999,999.99 $999,999,999,999.99 $999,999,999,999.99 $999,999,999,999.99 $999,999,999,999.99 -$999,999,999,999.99

18 19 20 21 22 23

Rehabilitated Loans FFEL Consolidations Default/Administrativ W age Garnishment Collections e Bankruptcy Collections Default FFEL Consolidated by DL Fee Total Due To/From Guarantor

-$999,999,999,999.99 -$999,999,999,999.99 -$999,999,999,999.99 -$999,999,999,999.99 ################# +/-$999,999,999.99

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MR-1, Claims Paid
• Reinsurance
– Claim Categories • Default • Exempt/LLR • Death/Disability • Closed School/False Certification • Bankruptcy • Unpaid Refunds/ Discharges

10

MR-1-A, Defaults
• Example: GA pays lender claim $9,800, based on the lender 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.

Reinsurance Requested From ED

Amount Paid to Lender

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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

12

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)

13

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

14

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

15

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
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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)

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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%)]
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MR-10, Rehabilitated Loan Refund
Principal Payoff Amount $ 9 .2 93 7 Accrue Othe Total Payoff d r Inte st Charge re s Amount $ .7 6 3 $ 8 .0 15 0 $ ,1 5 0 1 8 .0

S cre e tary’s S hare $ 9 .2 * 9 % * 8 .5 = 93 7 8 1 % $ 9 .3 73 2 GA Re ntion te $ 9 .2 * 1 .5 = $ 8 .7 9 3 7 8 % 13 5

Comple nt me (for informational $ ,1 5 0– $ 9 .3 – 1 8 .0 73 2 purpose only) s $ 8 .7 – $ .7 – $ 8 .0 13 5 6 3 15 0 =$ 6 0 1 .2

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MR-11, FFEL Consolidation Refund
Exa ple FFELP Loa Consolida m : n tion Re porting (Re insura Ra = nce te 98%)
Payoff Amount Outstanding Principal Outstanding Accrued Interest Other Charges Calculated $30,000.00 Secretary’s Share $20,000.00 * $20,000.00 98% = $19,600.00 $10,000.00 * $10,000.00 98% = $9,800.00 $30,000.00 * 8.5%= $2,550.00 Calculated GA Retention

$30,000.00 x 10% = $3,000.00

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Secretary’s Fee

Reinsurance Complement

GA Retention

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MR- 12, Wage Garnishment
Exa ple Wa Ga m : ge rnishm nt Colle e ctions (Re insura Re burse e Ra nce im m nt te = 95%, Colle ction Re ntion Ra – 24%) te te Total Collected Other Charges $8,000.00 5,000.00 2,000.00 1,000.00 ($5000 * .95) ($2000 *. ($1000 * .95) - ($5000 *. 95) - ($2000 ($1000 * .24) 24) *. 24) = = $710.00 = $3,550.00 $1,420.00 $5000 * .24% $2000 * $1000 *.24% = = $1,200 .24% = $480 $240 Principal Interest

Secretary’s Share GA Retention

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MR-13, Default Collections
Sm a ple De ult Colle fa ctions: (Re insura nce Re burse e Ra = 98%, im m nt te Colle ction Re ntion Ra – 24%) te te Total Collected $38,000.00 Secretary’s Share GA Retention Principal 15,000.00 Interest 12,000.00 Other Charges 11,000.00

($15000 *. 98) ($12000 *. 98) - ($11000 * .98) - ($15000 * ($12000 * .24) ($11000 * .24) .24)= $11,100 = $8,880.00 = $8,140.00 $15000 * .24% $12000 * .24% = $3,600 = $2880.00 $11000 * .24% = $2,640.00

25

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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

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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
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MR 16, Total
• 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..

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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

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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.

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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.
q

MR-27 Default FFEL Consolidated by DLP MR-28 Subrogated Loans (Assignments)
Loans accepted into the Debt Collection Management System

q

– MR-29 Default Loans Transferred Out
q

MR-30 Default Loans Transferred In MR-31 Other Transactions Affecting the Federal Receivable

q

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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.
q

MR-27 Default FFEL Consolidated by DLP MR-28 Subrogated Loans (Assignments)
• Loans accepted by the Default Resolution Group

q

–MR-29 Default Loans Transferred Out
q

MR-30 Default Loans Transferred In MR-31 Other Transactions Affecting Federal Receivable

q

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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: • MR-34: • MR-35: Not Delinquent (Current Loans) 1 - 90 Days Delinquent 91 - 180 Days Delinquent

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

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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.

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Technical Slide
We appreciate your feedback and comments.
Barbara Johnson 202.377.3327 Sandra Simmons 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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