Important Reminders for Lenders
LOUISIANA STUDENT FINANCIAL ASSISTANCE COMMISSION
|Lenders and Schools|
|February 17, 1997|
|Important reminders for Lenders - Limit on Cures, Conversion from Old to New Due Diligence, and Proofs of Claim and Assignments during Bankruptcy|
To assure that your Common Manual remains current, please record this document on your LPM/LPB index, and retain it in Appendix E of your manual.
Limit on Cure of Unreinsured Loans
Federal regulations published December 18, 1992 specify that lenders must complete cure activities within three years on a loan for which insurance is lost due to servicing violations. The Department requires that lenders must complete the prescribed cure activities and reinstate the loan's guarantee not more than three years from:
The last date the loan could have been filed as a claim with the guarantor, if the claim was not filed, or
The date the guarantor rejected the claim that was filed.
Failure to complete the activities and reinstate the loan's guarantee by the end of the three year period will result in an irrevocable loss of the loan's reinsurance.
This change will be enforced for loans on which the first day of delinquency on the oldest outstanding due date is after July 1, 1996. The oldest outstanding due date is the date from which the current 180 day due diligence counter is based and is sometimes referred to as the "latest", "current", or "next due date. [See Common Manual 8.8.F. and LPM L96-5 dated July 8, 1996.]
Conversion From "Old" to "New" Due Diligence Collection Requirements
New due diligence provisions will be enforced for loans on which the first day of delinquency on the oldest outstanding due date is after July 1, 1996. [See LPM L96-3 dated June 6, 1996.]
Proofs of Claim and Assignment of Proofs of Claim during Bankruptcy
LOSFA would like to remind our lenders that it is their responsibility to file a Proof of Claim with the Bankruptcy Court prior to forwarding a bankruptcy claim to our office. Only a copy of the Proof of Claim should be included in the claim package. LOSFA will not be responsible for Proofs of Claim received by the courts after the deadline. This could ultimately lead to a loss of guarantee. [See Common Manual 8.2.D.]
The claim package must also include an assignment of the Proof of Claim. The original of the assignment form may be forwarded to LOSFA. Upon acceptance of the bankruptcy claim, LOSFA will forward the assignment document to the Bankruptcy Court. In the event the claim does not qualify for payment, the assignment will not be sent to the court. It will be returned to the lender, eliminating the need to reverse the assignment when the claim does not qualify for payment. [See Common Manual 8.3.B.]