Common Manual Update Consolidation Loan Reporting Penalties

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.

Loan Program Memorandum (LPM) L97-4, dated March 27, 1997, included the new Common Manual "Requirements for Reporting Consolidation Loans". This policy required lenders to notify the guarantor within 60 days of the date on which a consolidation loan is disbursed. In LPM L97-6, dated June 9, 1997, LOSFA extended the reporting timeframe from 60 to 90 days before we will take any action against a lender.

This Common Manual policy has been modified to grant lenders an additional 60 days from the date the guarantor rejects the application (plus five days mail time) to provide additional or corrected information if there is a data discrepancy. In lieu of the extension stated in LOSFA’s LPM L97-6, we will honor the more generous provisions of the Common Manual modified policy.

In addition, the penalty for the lender’s failure to report consolidation loan information to the guarantor has been changed as follows:

The guarantor reserves the right to take appropriate corrective action (including the imposition of interest penalties), if the lender fails to report the making of a Consolidation loan, fails to report the disbursement of additional funds, or fails to report any other adjustment of the outstanding original balance within 60 days after that activity occurs. Repeated or intentional non-compliance (including failure to reconcile) may result in the withdrawal of the loan guarantee.

In the event of extenuating circumstances, the lender may make appeal to LOSFA on a case-by-case basis for an additional extension of time within which to comply. LOSFA, while not required to guarantee the Consolidation loan(s), may choose to do so based on its review of the extenuating facts presented by the lender.

This change is effective for consolidation loans made by the lender on or after September 18, 1997. Subsection 9.1.C. of the Common Manual will be revised to reflect this change.