Guaranty Agency Financial Report for Beginners

1
Session 65

• Guaranty Agency Financial Report for Beginners
• (ED Form 2000)
• Barbara Johnson
• Sandra Simmons

2
Agenda

• Introduction
• Insurance vs. Reinsurance
• Secretarys 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
• FSAs Role
• GAs 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
Secretarys Share

• The amount of the collections, which a guaranty
  agency must return to ED, is referred to as the
  Secretarys equitable share of collections.
• The formula for calculating the Federal share of
  collections is
• Total Collected
• less Reinsurance Complement
• less GA Retention
• Secretarys 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
  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 agencys
  reporting would look like this.

12
MR-2, Borrower Payment Return

• Refund of Default Collections to Borrower
• GA Refunds Borrowers 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 lt 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
(No Transcript)
21
MR-11, FFEL Consolidation Refund
22
Secretarys Fee
GA Retention
Reinsurance Complement
23
MR- 12, Wage Garnishment
24
(No Transcript)
25
MR-13, Default Collections
26
(No Transcript)
27
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

28
MR-15, Default FFEL Consolidated by DL Fee

• Secretarys 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

29
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..

30
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

31
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 Agencys Accruals
• Accrued Interest calculated by the GA on the loan
  principal of a claim for collection from the
  borrower during the fiscal year.

32
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

33
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

34
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

35
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.

36
Technical Slide

• We appreciate your feedback and comments.
• Barbara Johnson Sandra Simmons
• 202.377.3327 202.377.3332
• BJ.Johnson_at_ed.gov Sandra.Simmons_at_ed.gov
• Or FSA_GAR_at_ed.gov
• 202.275.3481 202.275.3481