Common Manual Update



LPM NO.: L2001-5 Effective Date: As Indicated
Pub. Date: June 4, 2001 Distribution: Lenders and Schools
Topic: Correction to Common Manual Update

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.

On May 11, 2001, LOSFA distributed L2001-4, Common Manual Update which provided summaries to inform schools, lenders, and servicers of the latest Common Manual policy changes which will appear in the manual's next annual update. A correction to "Economic Hardship Deferment", page 12 of that LPM is required. The second to the last sentence currently reads as follows:

"...Any retroactive period of economic hardship granted under this revised policy must include July 1, 2000, or a later date..."

The date in the above sentence should be corrected to reflect a July 1, 2001 date. Therefore, the sentence should read as follows:

"...must include July 1, 2001, or a later date."

The full article with the correction incorporated follows:

Economic Hardship Deferment

The Common Manual has been revised to update the economic hardship deferment information. Revised policy and regulation require the lender to use evidence of the borrower's "monthly income," rather than "total monthly gross income." "Monthly income" is defined as the gross amount of income received by the borrower from employment and other sources, or one-twelfth of the borrower's adjusted gross income, as recorded on the borrower's most recently filed federal income tax return. There is no longer a difference in required documentation for an initial and a subsequent economic hardship deferment. The revised policy and regulation allow a lender to grant the deferment for periods that, collectively, do not exceed 3 years. Any retroactive period of economic hardship granted under this revised policy must include July 1, 2001, or a later date. In all cases, the lender must ensure that the borrower's required documentation supports the begin date of the economic hardship period.

Affected Sections: 7.10.P.
Effective Date: Economic hardship deferments granted by the lender on or after July 1, 2001.
Basis: Final Rules published in Part V of the Federal Register, pages 65616-65622, dated November 1, 2000; ยง682.210(s)(6).
Policy Information: Reference 523
Guarantor Comments: None.