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.

The following summaries inform schools, lenders, and servicers of the latest Common Manual policy changes. These changes will appear in the manual's next annual update in 2002. However, these changes are effective before the next update is scheduled to be delivered.

Lender of Last Resort (LLR)

Previous policy states that the guarantor will respond to the student's application for a lender of last resort (LLR) loan. However, with the rapid development of electronic processes, the guarantor may receive the borrower's request in a number of formats. Revised policy deletes the reference to the guarantor's receipt of an application and inserts the phrase "request from the borrower." This phrase adds flexibility but continues to ensure that the guarantor responds within 60 days of receiving a complete request for an LLR loan.

Claim Recalls

The Common Manual has been updated to clarify that a lender is required to recall a claim if it approves a forbearance agreement that brings the loan to 210 or fewer days delinquent.

Cure Procedures

The Common Manual has been revised to inform lenders that they may begin cure activities immediately upon the discovery of a loss of guarantee. It is to the lender's advantage to begin cure activities as quickly as possible in order to avoid losing contact with the borrower. In addition, beginning cure activities immediately upon the discovery of a loss of guarantee may reduce the lender's loss of interest benefits and special allowance. Regulations still require that cure activities be completed not later than 3 years from either:

1. The last date the loan could have been filed timely as a claim with the guarantor, if the claim was not filed.

2. If the claim was filed, the date the guarantor returned the claim for loss of guarantee.

Pro Rata Refunds

As a result of the implementation of the return of Title IV funds requirements, pro rata refunds have been eliminated. Therefore, the Common Manual has been updated by replacing, in the list of common program review findings for schools, the bullet that addresses the incorrect application of a pro rata refund policy with a bullet that addresses the incorrect application of the return of Title IV funds requirements. In addition, the definition of pro rata refunds has been removed from appendix G.